Bsnl Stock and Share Market - DOC

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					BSNL-MTNL merger back on the menu
PSUs discuss host of issues with PM.
Thomas K. Thomas
New Delhi, Jan 7
The merger talks between Bharat Sanchar Nigam Ltd and Mahanagar Telephone
Nigam Ltd could be back on the menu. The two PSUs discussed the issue at a
meeting with the Prime Minister on Wednesday as part of a plan to revive the
company's profitability.
The two telecom companies have been exploring possibility of a merger for the
past two years, but issues related to management, employee compensation and
holding structure had put the deal on a backburner.
Pressure to perform
But now with both BSNL and MTNL losing their market share to private players,
there is pressure on them to perform. While BSNL does not have access to most
lucrative markets of Delhi and Mumbai, MTNL does not have presence in other
parts of the country. Synergising their operations could put them in a better
position to take on the intense competition in the mobile segment.
In a bid to get BSNL to work more efficiently, the Government is also looking to
get the company listed on the stock exchanges. Though the Government had
given its nod for the Initial Public Offering (IPO) over a year back, the employees
union are against the proposal. The BSNL management has been asked to
negotiate with the employees union and move ahead on the plan.
Issues related to BSNL's 93 million line mobile equipment tender was also
The tender, floated in 2007, has not yet been awarded due to controversy over
the way the company selected the vendor. BSNL may be asked to exclude 3G
equipment from the tender altogether and stick to buying only 2G gear.
Meanwhile the Central Vigilance Commission is also investigating allegations of
irregularities in selecting the vendors.
In addition, BSNL has also sought a waiver of its licence fee which could lead to
savings of over Rs 4,000 crore. However the decision will have to be taken in
consultation with the Finance Minister. But private players are likely to object to
this waiver and also claim similar sops.
The profits of the two PSUs have been declining over the past two years due to
intense competition from the private operators. BSNL, which at one time was the
number two mobile player in the country, has now slipped to number four. The
company's profits have also fallen drastically and the company could go into the
red at the end of this fiscal.

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