Too little, too late? Merger unlikely to revive BSNL and MTNL, say analysts

The government’s proposed decision to merge state-owned telecom companies Mahanagar Telephone Nigam Limited (MTNL) and Bharat Sanchar Nigam Limited (BSNL), announced after market hours on Wednesday, has come too late and might not meaningfully revive both companies, say analysts. They, however, believe that the proposed measure will create some competition for private players and contain operational costs.

“The announcement has come too late. This should have been done years ago. Both these telcos are bleeding on the operational front. The merger, along with the proposed voluntary retirement scheme (VRS) package, can help contain operational costs, but it may not be sufficient to revive the sagging fortunes,” says A K Prabhakar, head of research, IDBI Capital.