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BSNL-MTNL merger will form a financially stronger entity, says Frost & Sullivan

April 02, 2019
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According to Frost & Sullivan, the merger of government-run telcos Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) could potentially increase overall valuation of the merged entity and give it financial strength to tackle competition from private telcos. It could then receive a better credit term, an integral component of capital intensive businesses.

The merger will make both telcos leaner thereby helping in reducing capex and opex. The merged entity could optimise costs and benefit from one common product, marketing, and customer service team. It will also boost the enterprise and wholesale business allowing the telco to offer increased value to large and medium enterprises across the country. Also, it will be more convenient for global telcos to transact with a single entity.

However, there will be several challenges as well, one of the most important being the employees. Both the telcos were unable to pay employee salaries for February 2019. They have approached the government for financial assistance and in resolving legacy issues. However, the government is yet to take a final call on the request.

 

 
 
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