BSNL to take over MTNL operations, but no merger yet: Report

It is no secret that Bharat Sanchar Nigam Limited (BSNL) has been working on upgrading and managing the mobile network operations of MTNL (Mahanagar Telephone Nigam Limited) in Mumbai and Delhi. Currently, the Indian government is in the process of restructuring Rs 30,000 crore worth of debt of MTNL. Post the debt restructuring, BSNL will take over the entire operations of MTNL. So, while no official decision has been taken to shut down MTNL yet, it has been confirmed by an ET report that BSNL will take over the operations of MTNL. As for the employees of MTNL, the government is mulling whether the 3,000 MTNL employees should be given a Voluntary Retirement Scheme (VRS) or whether they should be transferred to BSNL.

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Both BSNL and MTNL were struggling to run their businesses and make profits. The state-owned telecom companies were losing customers to private telecom companies. Since the debts of both companies were very high, a merger between them did not make sense as it would only add to the problems of both companies. Therefore, the government decided to restructure the debts of both companies and provide them with sovereign guarantees so that they could raise long-term loans.

MTNL, which operates only in Mumbai and Delhi, is unlikely to survive. Hence, since BSNL is pan-India, its operations will also be transferred to BSNL to handle. It is not clear when MTNL will shut down completely, but one thing is clear, this will not be a merger. BSNL will be responsible for handling all existing MTNL customers in both the regions.

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It will be interesting to see how exactly this will play out, as MTNL is a publicly listed telecom company. So any decision taken by the government will not only impact customers or employees of the state-owned telecom company, but also its investors.

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