DoT rules out BSNL-MTNL merger

The Department of Telecom (DoT) has ruled out the possibility of merging the two PSUs - BSNL and MTNL - on the grounds that MTNL is listed entity.Telecom Minister A Raja was recently apprised by DoT officials of this decision which says MTNL has private stakeholders who may not favour a merger with BSNL, official sources said.

While the government has 100% ownership in BSNL, MTNL has 56.25% government stake. MTNL is listed in the domestic market as well as on the New York Stock Exchange.The merger plan was first floated by late communications minister Pramod Mahajan and it was revived later by former minister Dayanidhi Maran.MTNL has minority shareholders/ADR holders whose approval for the merger decision is crucial.

After I-Sec submitted its report, the government was exploring the financial pros and cons of a reverse merger of BSNL with MTNL to take care of the private shareholders' interests.

A merger mode would necessitate a mandatory delisting of MTNL for a subsequent relisting of the combined BSNL-MTNL entity which would have been a complicated process for DoT to handle.