Winning Bizness Desk

Mumbai. Here is the latest move for a merger being planned despite the government’s failure to merge BSNL and MTNL in the past. Now, the government is reviving the proposal to merge BSNL, MTNL and BBNL (Bharat Broadband Network) — which is implementing the BharatNet project — to create a single state-owned telecom entity. The department of telecommunications (DoT) has floated a draft Cabinet note regarding the merger of these three state-run entities to create a financially viable telecom firm.

Plan to infuse funds of Rs 1.6 trillion

The government plans to infuse funds to the tune of Rs 1.6 trillion, of which Rs 36,260 crore would be cash support for BSNL/MTNL over the next three years. The combined debt of BSNL/MTNL stood at Rs 59,588 crore as at January-end. Similarly, the adjusted gross revenue (AGR) dues (licence fee and spectrum usage charges) of the firms stand at Rs 43,148 crore at present. “If the firms need to survive, their balance sheets need to be repaired,” said a source. The government is considering converting the AGR dues into equity for both BSNL and MTNL.

BBNL depends upon BSNL

As far as BBNL is concerned, it currently to a large extent depends upon BSNL to provide connectivity and bandwidth. The firm was created in 2012 as project management entity only and has no apparatus for marketing, which makes it unviable as a standalone entity. “If BBNL is merged with BSNL, the latter’s 860,000 km of optic fibre, along with 560,000 km of fibre of BBNL’s can create a large integrated fibre network of 1.42 million km. Combined with BSNL’s extensive market presence across the country, this can give last mile connectivity for rural areas,” sources added.

Focus on pan-India 4G wireless services

The government feels that once such a merger is complete, the combined entity would be able to focus on pan-India 4G wireless services, fixed line fibre broadband services, and enterprise services in a more effective and cohesive manner.