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Is merger of BSNL and MTNL possible?
The question of merger of the two telecom PSUs - BSNL and MTNL, is coming up again and again. Is it possible? What are the real issues that could hold it back and how will the merger benefit these PSUs? Read on.

MTNL WAS formed on 1st April 1986 as a wholly government company under Department of Telecommunications (DOT), to provide telecom services, except telegraphs, in the metros of Delhi and Mumbai. BSNL was formed on 1st October 2000 as government company like MTNL, but to provide telecom services all over India except in the above two metro cities and the telegraphs including in the metros.

What was the necessity to break the DOT services into two corporations, instead of continuing as a government department which was well appreciated as an efficient and reliable service?

The government has adopted the neo-liberalisation process since the 1990s. Instead of strengthening the Public Sectors which were called as ‘Temples of modern India’ by the first Prime Minister Pandit Jawaharlal Nehru, the present ruling classes wanted to disinvest and sell the PSUs at cheap prices to the corporates. Their slogan was, ‘Business is not the business of the government’.

It is not easy to privatise the government department directly and hence corporatisation, which is considered as the first step towards privatisation. How another corporation formed from DOT viz Videsh Sanchar Nigam Limited (VSNL) was sold to the Tatas is well known. In the same way, the government wants to privatise both MTNL and BSNL. MTNL is already disinvested to the extent of 45%, but due to strong resistance from the unions, no disinvestment has taken place in BSNL so far.

Both the PSUs were in profit earlier, but are in loss at present due to the pro-private, anti-PSU policy of the government. DOT services should not have been corporatized and at least not bifurcated into MTNL and BSNL.

Interestingly, years after formation of these two companies, some proposals from the government hint at the merger of the two. The employees are in support. Merger will help synergy and benefit the operations on an all India basis.

But there are two issues to be sorted out. One is about wages, perks, promotion, seniority, pension etc. These are different in these two companies. How it can be solved? We have the tragic experience of the merger of Air India and Indian Airlines which has resulted in much heartburning and agitations due to the injustice meted out to one or other section after merger. There are about 2.74 lakh workers in BSNL and about 35,000 in MTNL. These issues have to be sorted out before merger.

Another issue is that MTNL is disinvested and BSNL is not. How this issue can be dealt with after merger. One way is to buy back the shares sold by MTNL and then merge. But this is almost an impossibility with the privatisation policy of the government.

Under the circumstances, the chance for any merger between the two telecom PSUs is dim. But another decision can be taken by the government. BSNL can be allowed to provide services in Mumbai and Delhi and in the same way MTNL allowed to function outside Delhi and Mumbai. The oil PSUs are not restricted to any areas, but work on all India basis. Why that position can’t be introduced in telecom also. That will benefit both the companies.

(About the Contributor: V.A.N. Namboodiri is President of the BSNL Employees Union, the recognised union in the telecom PSU. He is the President of BSNL Casual and Contract Workers Federation and also the convener of Joint Action Committee of BSNL Unions /Associations of Non-Executives and Executives)

Editorial NOTE: This article is categorized under Opinion Section. The views expressed in this article are solely those of the author and do not necessarily represent the views of In case you have a opposing view, please click here to share the same in the comments section.
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