In the telecom sector, the merger of two government-owned companies have taken limelight on Sunday. It is said that Bharat Broadband Nigam Limited (BBNL) will be merging with loss-making telecom operator Bharat Sanchar Nigam Limited (BSNL). The merger is expected to take place this month. However, details of the merger are yet to be announced.
At a recent event organized by the All India Graduate Engineers and Telecom officers Association (AIGETOA). BSNL chairman and managing director PK Purwar revealed that the Centre is giving the telecom firm an opportunity for a turnaround.
Speaking at an event earlier this month, Purwar said the government had already taken the “policy decision” to merge BBNL and BSNL. The process was scheduled to be completed before March 31.
“BBNL is going to be merged in BSNL. This means that all of the BharatNet work being done on an India basis will come to BSNL. The government has taken this policy decision,” Purwar said at an event organized by All India Graduate Engineers and Telecom officers Association (AIGETOA)
Puwar told in the All India Conference held by AIGETOA, that “the government has taken a policy decision that BBNL is going to be merged into BSNL. This means all work of BBNL at the pan-India level is going to come to BSNL,” reported by PTI.
BSNL Benefits
BSNL has already built a network of 6.8 lakh kilometers of optical fiber cable (OFC) network. Now, with the proposed merger, BSNL will get access to 5.8 lakh kilometers of optical fiber that has been laid across 1.85 lakh village panchayats across the country with the use of the Universal Service Obligation Fund (USOF).
“As part of the telecom reforms package last year, a method has been devised to convert government dues into equity. It has already been availed by private sector player Vodafone Idea, so the same method can be applied to clear the books of BSNL/MTNL,” the source added.
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 a 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 fiber, along with 560,000 km of fiber of BBNL’s can create a large integrated fiber 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.
What in the Merger
According to sources, 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.
The government plans to infuse funds to the tune of Rs 1.6 trillion. The 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 of January end. Similarly, the adjusted gross revenue (AGR) dues (license 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.
It is worth noting that BBNL employees are not really in favor of this merger. The BBNL employees are unhappy with the non-performance of BSNL on the BharatNet project.
