Parliamentary committee recommends DoT to merge MTNL with BSNL

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The Parliamentary Standing Committee on Communications and Information Technology has recommended the Department of Telecommunications (DoT) to merge MTNL’s debts and assets of over Rs 26,500 crore into a special purpose vehicle and then merge its operations with BSNL. It also recommended that BSNL should be allotted spectrum for launching 5G services in the country.

According to a submission made by PK Purwar, Chairman and Managing Director of BSNL and MTNL, BSNL is expected to be profitable till 2025-26, while MTNL will not be able to survive. The scenario for MTNL is grim as it has debt of over Rs 26,000 crore and revenue of only Rs 1,300 crore.

The parliamentary committee has recommended that DoT should consider various options, including fixation of debt and assets like Air India and merger of operations with BSNL. BSNL and MTNL will soon come out with a practical proposal regarding the future of MTNL.

“With a debt of Rs 26,000 crore, even if God comes down to earth and tries to solve his problems, the company cannot be revived. It is a fact of life; We have to accept it,” MTNL CMD told the panel.

The committee also noted that the closure of MTNL will have a negative impact on public sector banks.

To recall, both MTNL and BSNL were given a relief package of around Rs 70,000 crore in 2019, after which MTNL was expected to be profitable by 2020-21 and BSNL by 2023-24. Despite the relief package and revival plan, BSNL is set to report an estimated net loss of Rs 5,986 crore for the year 2022-23, while MTNL is projected to report a net loss of Rs 3,139.60 crore for the same period. However, the company is reporting operating profit.

The implementation of the revival plan helped reduce the salary bill of BSNL by about 50 per cent and that of MTNL by 90 per cent.

DoT has informed the committee that the estimated net loss of BSNL is due to absence of 4G services, fall in landline revenue and non-availability of funds for capital expenditure. The government has allocated Rs 44,720 crore to BSNL and Rs 23,270 crore (including GST) towards cost of 4G spectrum for implementation of various revival measures during 2022-23.

The panel said that the launch of 4G service will help BSNL strengthen its hold in the telecom sector and will also help in increasing revenue earnings.

“The committee also recommended that BSNL should also be allotted 5G spectrum in all bands so that BSNL can start 5G services with private telecom service providers. It is imperative that BSNL is given equal opportunity to launch 5G services and purchase equipment like private telecom service providers.

The Department of Telecommunications after a parliamentary committee recommended the merger of MTNL with BSNL, first appeared in BGR India.

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