The Department of Telecommunications (DoT) is considering several options before the merger of Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL) begins. It is considering delisting MTNL and then merging it into BSNL. Another option is to list BSNL and merge the two telecom operators based on their valuations. The possible delisting of MTNL is reportedly a favoured option as listing BSNL would be difficult, given the latter?s poor financial status.
At present, DoT is also looking at options for restructuring MTNL?s debt worth Rs 146 billion as BSNL will not be willing to take the former?s dues post-merger. MTNL has outstanding loans for buying 3G spectrum and broadband wireless access (BWA) spectrum in 2010. The telecom department might plan to convert MTNL?s loans into equity or even extend a soft loan to the merged entity. It will finalise the options after receiving inputs from the working groups comprising BSNL and MTNL officials.
DoT is also exploring ways to reduce tax payout of both the telecom operators by asking both the companies to use their existing infrastructure-sharing pact for providing joint enterprise business solutions to companies. Under the pact, BSNL and MTNL share buildings, mobile masts and international long-distance phone networks to serve enterprise customers.
