Lok Sabha Question No. 513 (UNSTARRED), answered on 2020-02-05
Subject: Effect of Merger of BSNL and MTNL
Ministry: COMMUNICATIONS
Asked by: Mimi Chakraborty

## GOVERNMENT OF INDIA MINISTRY OF COMMUNICATIONS DEPARTMENT OF TELECOMMUNICATIONS

## LOK  SABHA UNSTARRED QUESTION NO. 513 TO BE ANSWERED ON 5 TH  FEBRUARY, 2020

## EFFECT OF MERGER OF BSNL AND MTNL

## 513. MS. MIMI CHAKRABORTY:

Will the Minister of COMMUNICATIONS be pleased to state:

- (a) whether the Government is proposing to merge MTNL and BSNL;
- (b) if so, the details thereof and the reasons therefor and the time by which the proposed merger is likely to be done;
- (c) the revenue losses and fall in profits of MTNL and BSNL during each of the last three years and the reasons therefor; and
- (d) the  steps  taken  by  the  Government  to  ensure  that  employees  of  BSNL  and  MTNL  are  not adversely affected by the proposed merger?

## ANSWER

## MINISTER OF STATE FOR COMMUNICATIONS, HUMAN RESOURCE DEVELOPMENT AND ELECTRONICS & INFORMATION TECHNOLOGY (SHRI SANJAY DHOTRE)

- (a)  &  (b) The Cabinet in the meeting held on 23.10.2019 approved the revival plan for BSNL and MTNL which inter-alia, includes in-principle approval for merger of BSNL and MTNL.

Mahanagar Telephone Nigam Limited (MTNL) operates in metros of Delhi and Mumbai and Bharat  Sanchar  Nigam  Limited  (BSNL)  operates  in  rest  of  India.  The  merger  will  benefit BSNL/MTNL through pan-India footprint, synergy in operations, reduced fixed costs and overhead, sharing of technical infrastructure and enhanced Enterprise business etc.

The process of merger is to be completed in 18-24 months.

(c) Details  of  Revenue  and  Profit/(Loss)  of  BSNL  and  MTNL  for  the  last  three  years  are  as under:

(in Rs. crore)

| Financial Year   | BSNL    | BSNL          | MTNL    | MTNL          |
|------------------|---------|---------------|---------|---------------|
|                  | Revenue | Profit/(Loss) | Revenue | Profit/(Loss) |
| 2016-17          | 31,533  | (4,793)       | 3,552   | (2,971)       |
| 2017-18          | 25,071  | (7,993)       | 3,116   | (2,971)       |
| 2018-19          | 19,321  | (14,904)      | 2,607   | (3,398)       |

Stiff  competition  in  the  telecom  sector,  debt  burden,  high  staff  cost  and  absence  of  4G services (except on a limited basis in certain areas for BSNL) are the reasons for losses in BSNL and MTNL.

(d) Government has taken following steps to ensure that the employees of BSNL and MTNL are not adversely affected:

- i. Introduction of an attractive Voluntary Retirement Scheme (VRS) for the employees of age 50 year and above.
- ii. For the remaining employees of BSNL and MTNL, Government has taken following steps to make these companies competitive and self-sustaining:
- a. Administrative allocation of spectrum for 4G services to increase the market share of mobile business and higher Average Revenue Per User (ARPU).
- b. Monetization of sparable land and buildings so as to address the liquidity requirement and re-payment of borrowings so far made.
- c. Sovereign  Guarantee  bonds  of  Rs  15,000  crore  to  restructure  existing  borrowing  and support CAPEX/OPEX.
- d. Merger of BSNL and MTNL to improve synergy in operations.

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