Why merging BSNL and MTNL is a good idea

The Cabinet decision to merge BSNL and MTNL is probably the third attempt at merging the two public sector telecom companies.

In 2002, then Communications Minister Pramod Mahajan came up with the idea to merge Mahanagar Telephone Nigam Ltd with Bharat Sanchar Nigam Ltd. The rationale was simple: MTNL, which operates in Delhi and Mumbai, would not survive unless it got access to a larger market. Since there was no reason to have two pan-India telecom operators, Mahajan thought it was best to merge MTNL with BSNL. The merger didn’t go through due to structural complexities. MTNL is listed and BSNL is not so there was an issue of whether MTNL should be delisted or BSNL should be listed. The other major issue was the employees union was opposed to the entire idea of the merger.