For anyone wondering how close the long-awaited merger between India’s ailing state-run telecoms carriers Mahanagar Telephone Nigam Limited (MTNL) and Bharat Sanchar Nigam Limited (BSNL) may be, it’s apparently getting closer – albeit there appears to be another hurdle.
Apparently the expectation is that the merger of MTNL and BSNL will be completed by the end of next year, but before that happens the government needs to delist MTNL from the stock exchanges. Thus, the legal complexities are being looked into and consulting firm Deloitte has been appointed to advise on the process.
This merger has been on hold for more than ten years, though, as a Department of Telecommunications (DoT) official has confirmed to India’s Economic Times, the aim is still for one entity to operate at a pan-India level to provide seamless services to consumers. BSNL already maintains MTNL's mobile network in Delhi and Mumbai.
The most recent delay was, as we reported at the time, apparently down to MTNL’s debts, which are said to be close to 300 billion rupees or US$3.6 billion.
However the delisting could be a long process and needs to involve discussions (now ongoing) with markets regulator the Securities and Exchange Board of India (SEBI) as well as a detailed report on the legal issues and how to move forward with the delisting process.
Both companies have befitted from massive government investment in revival packages over recent years, but improvement in both companies’ fortunes has also been tied to voluntary retirement schemes, debt restructuring by raising of sovereign guarantee bonds, administrative allotment of spectrum for 4G services through capital infusion, monetization of core and non-core assets and, of course, a merger between BSNL and MTNL.
