BSNL, MTNL may be trifurcated
Group of ministers to discuss proposal to split companies into three entities, move seen as precursor to merger
The group of ministers (GoM) looking at ways to revitalise the two
state-run telecom companies — Bharat Sanchar Nigam Ltd (BSNL) and MTNL —
is expected to meet in the next few days and discuss the proposal for
trifurcation of the two behemoths. The plan is to spin off two new
companies — one each for network infrastructure and land development —
out of each telco.
BSNL and MTNL would continue to be services and marketing companies.
Among the new firms proposed to be spun off, each of the two would get
one company to handle telecom infra (towers, networks, etc) and the
technology business, and another (for land development and utilisation)
to manage and monetise land assets in phases.
The GoM would also look at two alternative proposals to infuse cash into
the two telcos after they decided to surrender broadband wireless
access spectrum to the government. BSNL gave up spectrum in six circles,
while MTNL did so in Delhi and Mumbai, the two circles in which it
operates.
(RINGING IN CHANGE FOR GROWTH)
One of the proposals is to refund the companies the entire Rs 11,259.48
crore they had paid for the spectrum — BSNL Rs 6,724.51 crore and MTNL
Rs 4,533.97 crore. Alternatively, the two could be paid on a pro-rata
basis, since the spectrum had been allocated in 2008. In the latter
case, the total refund would be to the tune of Rs 8,722.78 crore — Rs
5,204.98 crore to BSNL and Rs 3,517.80 crore to MTNL.
The proposed moves are being seen as the government’s first steps
towards its long-term plan to eventually merge BSNL and MTNL. According
to the presentation the companies are to make to the GoM, they together
have accumulated losses of a staggering Rs 38,440 crore (BSNL Rs 24,681
crore and MTNL Rs 13,759 crore), based on 2012-13 results.
BSNL, in its proposed presentation, has said it will be able to generate
Rs 250 crore in 2013-14 from sale of land, besides Rs 250 crore a year
in rental income from its assets starting 2016-17. The firm has land
assets in Mumbai’s Santa Cruz, Borivali and Deonar, Noida’s Sector 18
and 33 and Gurgaon’s Sector 18, apart from some tracts in Kolkata,
Hyderabad, Chennai and Trivandrum, among others.
The company has also appointed KPMG to look at ways and means to hive
off its tower business. The report is expected to come by July. Also,
BSNL is in the process of leasing out capacity in its Mumbai, Jabalpur,
Bhilai, Kolkata, Gopalpur and Kharagpur factories to the private sector.
These factories are for microwave towers, SIM cards, etc.
