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BSNL and MTNL are set to merge in an effort to improve cost efficiency and provide greater economies of scale
The Indian government has announced it will spend 410 billion rupees ($6 billion) to resurrect the fortunes of two of its beleaguered telcos.
Mahanagar Telephone Nigam Ltd., which provides services in Mumbai and New Delhi, will be merged with embattled national carrier, Bharat Sanchar Nigam Ltd (BNSL), according to a report by Bloomberg.
India’s telecoms market remains one of the most competitive, with operators being forced to trade on wafer thin margins, while simultaneously stumping up huge amounts of capital investment for network maintenance projects. MTNL has reported losses in 9 of the last 10 years, according to data from Bloomberg.
BSNL had previously announced plans to borrow 120 billion rupees (US$1.7 billion) to finance a major expansion plan designed to turn around its ailing fortunes.
The troubled Indian telco will push on with the plan to raise capital once it has secured cabinet approval, the Financial Express reported on Tuesday, citing a TV interview with company chairman and managing director P K Purwar.
BNSL had also previously announced that it would cut 80,000 jobs over the next 12 months as it looks to drastically reduce its outgoings.
"We all know that BSNL’s employee cost is 75% of the revenue. The number of persons in the organisation are far higher than the competitors. One of the proposals under discussion is the VRS. We are looking forward to 70,000 to 80,000 employees, and make it attractive for the employees, so that they can see value in the VRS," BSNL’s chairman, Pravin Kumar Purwar, told journalists at the Economic Times of India.
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