BSNL,MTNL to merge to target rivals?

In a bid to better target the competition from private players,govt is mulling a merger.

India’s telecom ministry is examining proposals by a government body to merge state-run telecoms firms Mahanagar Telephone Nigam (MTNL) and ITI Ltd with a bigger firm Bharat Sanchar Nigam (BSNL),a minister said on Wednesday,a move that may help them compete better with private rivals.

Reason for Airtel,Vodafone,Idea or even Reliance Communications and Tata Telecom to worry? Only time will tell,but the public sector unit (PSU) mergers usually nosedive – Air India,Indian Airlines,for instance.

Telecoms Minister Kapil Sibal said a committee in his ministry was looking into proposals by the Board for Reconstruction of Public Sector Enterprises (BRPSE) that had recommended merging telecoms gearmaker ITI with BSNL,or making it a separate unit of BSNL.

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The BRPSE has also recommended that MTNL,which provides telecoms services in the Delhi and Mumbai cities,could be brought under BSNL as a unit,Sibal told lawmakers in a written statement.

Shares in MTNL jumped 9.4 percent to 43.55 rupees,while those in telecoms gearmaker ITI surged 11.3 percent to 27 rupees in a Mumbai market that closed 1.7 percent up.

There have been several attempts in the past years to merge BSNL and MTNL to enable them to compete better with private sector rivals in the world’s fastest-growing market,but without any success.

Unlisted BSNL,once the country’s biggest telecom,has been losing market share to rivals. MTNL,which is listed on the Indian exchanges and also on the New York Stock Exchange,is much smaller as it operates only in Delhi and Mumbai cities.

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