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BSNL, MTNL merger deferred due to financial reasons, high debt

The central government on Wednesday stated that the proposed merger of MTNL operations with BSNL is deferred due to “financial reasons including high debt of MTNL.”

In a written reply to a question on Lok Sabha, Minister of State for Communications Devusinh Chauhan informed that the government had approved the revival plan of Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) on October 23, 2019, which inter-alia includes in-principle approval for merger of MTNL and BSNL. However, the proposal is currently under examination and stands deferred.

Shares of MTNL on Wednesday closed 5.65 per cent higher at Rs 26.20 apiece on BSE.

Earlier, a Parliamentary Panel had recommended the Department of Telecom (DoT) that it should consider carving out MTNL’s debt and assets worth over Rs 26,500 crore into a special purpose vehicle and then merge its operations with BSNL.

It also recommended that the loss-making firm should be allocated spectrum for rolling out 5G services at par with private telecom operators in the country.

MTNL was earlier expected to turn profitable by 2020-21 and BSNL by 2023-24 after both the PSUs were jointly given a relief package of around Rs 70,000 crore in 2019.

The DoT informed the committee that the projected net loss of BSNL is due to the absence of 4G services, decline in landline revenue, non-availability of funds for capital expenditure.

The government has allocated an amount of Rs 44,720 crore to BSNL for implementation of various revival measures during 2022-23 and an amount of Rs 23,270 crore (inclusive of GST) is allotted for the cost of 4G spectrum in financial year 2022-23.

Meanwhile, Telecom Minister Ashwini Vaishnaw earlier today said that the indigenous 4G telecom network will soon be rolled out across India with the BSNL planning to install about 1.12 lakh towers throughout the country.

The minister also said the Internet connection inside trains can be available only when the 5G network will be rolled out as communications get disrupted with 4G technology in trains running with the speed of 100 km per hour. BusinessToday

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