The Hindu Business Line : Govt may divest 5 pc in BSNL for MTNL merger

THE Government is exploring the option of divesting 5 per cent stake in Bharat Sanchar Nigam Ltd to facilitate the merger with Mahanagar Telephone Nigam Ltd.

The Ministry of Communication is in the process of appointing consultants to advise the Government on the best option to be taken for finding synergies between the two State-owned companies.

Senior officials in the Department of Telecom (DoT) said several options were being considered including the creation of a holding company with whom the shares of both BSNL and MTNL would be vested.

While MTNL is listed on the stock exchange, BSNL is wholly owned by the Government. Another option is to merge MTNL into BSNL.

Confirming the development, the Minister of State for Communications and Information Technology, Mr Shakeel Ahmad, said the Government was consulting experts to chalk out ways and means for the merger.

DoT has invited expression of interest from top bankers and consultants including Ernst & Young, HSBC, Boston Consulting Group to act as advisors to the Government.

On Thursday, a member of the National Advisory Council, Mr Sam Pitroda, said MTNL and BSNL should be given greater autonomy and the ultimate goal should be to reduce Government holding to below 51 per cent.

"They (BSNL and MTNL) need to be given autonomy individually or collectively. If it can be done through a merger or by taking BSNL public as a separate entity, so be it. The ultimate goal should be to reduce Government holding to below 51 per cent," Mr Pitroda said on the sidelines of the CII Leadership Summit.

The Government has been exploring ways to synergise the strengths of the two telecom companies for two years. The idea was first mooted by Mr Pramod Mahajan, the then Communications Minister.

According to officials in MTNL, the management of both the companies favoured a merger. They said that more than 95 per cent of the employees agreed with the path being taken by the Government to strengthen the two public sector companies.

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