BSNL IPO to pave way for merger with MTNL

NEW DELHI: The government has initiated steps to combine state-run firms BSNL and MTNL. According to government sources, the proposed merger may happen after BSNL’s initial public offer (IPO).

“The proposal was discussed during the NDA regime and shelved. With BSNL’s IPO looking a clear possibility now, the proposal is being reviewed,” an official in the department of telecommunication (DoT) said. “Once BSNL is listed on the Bombay Stock Exchange, we can explore various possibilities, which may include an open offer or a share swap deal,” he said.

DoT had in 2004 appointed a financial consultant to look into the proposed merger. It was, however, suggested the merger would be more meaningful if both the entities are listed. MTNL is already listed on the BSE. However, the proposal to list BSNL was shelved because of political opposition.

The UPA government had earlier taken up the proposal of BSNL’s listing, but it was not acceptable to the Left parties. With the Left out of the government now, the Centre is likely to push for an early IPO. The government believes there is synergy between the two firms. A merger will result in a combined entity with a turnover of around Rs 45,000 crore.

In comparison, Bharti Airtel had a turnover of Rs 27,025 crore in 2007-08, followed by Reliance Communications (Rs 18,827 crore) and Vodafone (Rs 15,288 crore). MTNL posted an 8.9% increase in net profit to Rs 500 crore in 2007-08 on a turnover of Rs 5,400 crore. “The combined entity will not only let BSNL foray into Delhi and Mumbai, but will also strengthen MTNL’s reach,” the official said.
thanks to :-economictimes.indiatimes.com