PMO hangs up on BSNL-MTNL merger plan for now

Rajesh Kurup Mumbai | Updated on August 22, 2019

Some good news At Tuesday’s meeting, the PMO approved capital infusion into BSNL for 4G rollout   -  PAUL NORONHa

Also rejects proposal to float a special purpose vehicle for land monetisation

In a move that has dashed the hopes for an immediate revival of State-owned telecom carriers, the Prime Minister’s Office (PMO) has rejected a proposal to merge the loss-making Mahanagar Telephone Nigam Ltd (MTNL) with the ailing Bharat Sanchar Nigam Ltd. However, it has assured to look into the matter later.

The PMO has also not approved a proposal to set up a Special Purpose Vehicle (SPV) for monetisation of land and transfer of BSNL’s ₹23,000-crore loan and an equivalent land parcel. The rejections came at a high-level PMO meeting held on Tuesday to consider the revival plans of the two PSUs.

“The PMO has rejected the merger proposal, which was earlier approved by the Telecom Ministry, even as it assured that the matter will be taken up later. This will delay the immediate turnaround plans of both the PSUs,” a source close to the development told BusinessLine.

“While discarding the SPV model, the meeting cited the experience at Air India where it (the model) was a failure. However, the land monetisation plans have been approved,” the source said.

The meeting was chaired by Nripendra Mishra, Principal Secretary to the Prime Minister, and attended by Department of Telecommunications Secretary Anshu Prakash, BSNL Chairman PK Purwar and officials of the two PSUs.

Revival plan

As part of a revival plan approved by the Telecom Ministry in July, MTNL was to be merged with BSNL after sorting out issues (including those related to human resources). Following the merger, MTNL was to be made a BSNL subsidiary.

According to the plan approved by Telecom Minister Ravi Shankar Prasad in July, a joint committee was to be put in place to oversee the entire process, spread over 18 months.

Silver lining

However, BSNL has something to cheer about as the PMO has approved capital infusion for the 4G rollout, the Voluntary Retirement Scheme and monetisation of land, optical fibre cable and towers.

A revised note detailing the new plans will be issued to the Cabinet, probably next week, another source said.

The revival plan approved last month recommended a ₹14,155-crore capital infusion into BSNL by the government to acquire 4G spectrum and a VRS for employees above 50 years, following which the age of retirement would be reduced to 58. The monetisation of land (to meet BSNL’s expansion plans) would be jointly monitored by BSNL, DoT and the Department of Investment and Public Asset Management.

Published on August 22, 2019

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