India’s State Owned Loss Making Telecom operator, Mahanagar Telephone Nigam Limited (MTNL), which currently operates in Delhi and Mumbai circles has requested the government of India for a bailout by unveiling package known as Special Purpose Vehicle (SPV) so that the Rs 20,000 crore debts and assets including 1,100 towers, lands and buildings are deleveraged to correct the financials of the company. MTNL has also submitted a proposal to the government about a big bang merger with BSNL so that the telco will get tremendous boost to expand operations across India on the basis of network utilization.
MTNL chairman and MD, Praveen Kumar Purwar told said in a statement, “In today’s below-cost competition, consolidation of BSNL and MTNL as one entity is the need of the hour and the only way to survive. Fragmented operations can only lead to their extinction.” He said that the government would need to work for MTNL’s sustenance and once the telecom operator’s financials are strong enough then a merger will BSNL can be relied upon.
He further added to his statement, “We don’t want to create a burden on BSNL. But it calls for addressing the Rs 20,000 crore debt and high employee cost by the government. MTNL has 23,000 employees. We want the government to address these issues by transferring them to another structure.”
The Chairman commented that in the long time horizon, MTNL is a feasible substance and can get by with a long run skyline, in any case, it should work in cooperative energy with BSNL for that to occur. He likewise included that problematic size of activities isn’t something which will make the element feasible.
In Q2 this year, MTNL detailed that its misfortunes developed to Rs 859 crore independent, with the prominent reasons for the equivalent being increment in account cost and falling apart deals. The representative cost compensated for 92.2% of the complete convergence of the organization, which was 29% more than the income created from its tasks of Rs 572.83 crore. Passing by the expressions of the evaluators, the total assets of the organization has been completely dissolved. Bharat Sanchar Nigam Limited, (BSNL) the forthcoming telco with which MTNL wishes to blend, additionally remains under an obligation of Rs 10,000 crore and has enlisted misfortunes of Rs 4,785 crore in a similar period.
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Telecom Minister had likewise commented before on the point of BSNL MTNL merger saying that there are various difficulties in transit of BSNL and MTNL partnership like workers, obligation, government incorporating shareholding in MTNL (56%) and the rest being held by open and institutional speculators. While MTNL is a recorded organization, BSNL is 100% claimed. The organization gloats of having 1.70 lakh representatives and out of the Rs 28,000 crore incomes, it likewise gives out Rs 16,000 crore every year in pay rates as it were.
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Manoj Sinha had said that there would requirement for an alternate structure like a SPV, which would help in assuming control over the Rs 20,000 crore obligation of MTNL, including the pinnacle and land resources. This move would remove the weight from BSNL’s head, on the off chance that the combination occurs.