The proposed merger between state-owned Bharat Sanchar Nigam ltd (BSNL) and Mahanagar telephone Nigam ltd (MTNL) has raised a number of questions, the main being whether these public sector telecom companies have the same reach as in 2002, when the idea of finding synergies between the two was first mooted by the then telecom minister Pramod Mahajan. Besides, the two PSUs will have to overcome a number of regulatory and operational issues, including bringing parity between the pay scales of the employees of the two companies. The centre will also have to address the complexities around de-listing of MTNL shares.
Even when Mahajan first aired the idea, and a committee under the department of telecom secretary was formed to look into its feasibility, it was found that there were too many bottlenecks, especially in dealing with the concerns of the employee unions of the two companies. BSNL has over two lakh employees and MTNL close to 45,000. The idea was then put on the backburner.
The issues that scuttled the merger between the two PSUs then, continue to exist even now. So, one is not sure how the centre will push this through. On the other hand, market dynamics have changed drastically. Back then, the two PSUs were the dominant players; now, they are not even among the top five operators. The merger is also coming too late to make any significant impact. According to TRAI, as of 31 December, BSNL and MTNL had a market share of about 9 per cent of the total wire