MTNL may become BSNL's virtual network operator; DoT seeks nod from DCC

Services likely to be offered in Mumbai, New Delhi initially

As the Centre faces a challenge in merging the two public sector telcos — Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL) — it is believed to have firmed up a plan to allow the functioning of MTNL as a virtual network operator (VNO) under the aegis of BSNL.

It is learnt that the arrangement would be such that MTNL would provide and manage landline, mobile and broadband services for BSNL. Initially, BSNL can begin by offering these services in Mumbai and New Delhi via MTNL.

“Internationally, a VNO is engaged only in mobile services, but here we have tweaked the definition a bit. Therefore, MTNL can provide all the services from landline, to mobile and broadband,” an official privy to the development told Business Standard.

Sources said the department of telecommunications (DoT) has internally taken the decision and will now have to seek approval from the Digital Communications Commission (DCC), the apex decision making body, in the telecom sector. DCC is headed by the telecom secretary and has representatives from the ministry of finance and NITI Aayog, besides other government departments.

It is believed that the government was struggling to merge the two PSUs, a proposal that was given Cabinet green light last year. The central government holds 57 per cent stake in MTNL and the remaining is held by the public.

A smoother merger process can take place if the government holds 90 per cent stake in both the entities, as mandated by the Securities and Exchange Board of India (Sebi). VNO status to MTNL essentially means that future appointments will be far and few and the remaining senior management, of whatever is left, will continue to work as usual.

The director (finance) of MTNL superannuated in September 2020, director (tec­hnical) is on his way to joining TCIL and the entity will be left with director (human resources and enterprise business).

On October 24, 2019, the Union Cabinet approved a Rs 68,751-crore revival package for loss-making BSNL and MTNL. These include 4G spectrum allocation and voluntary retirement scheme (VRS) as well as their merger. The Cabinet also approved merger of the two telecom companies and indicated that till the merger process is complete MTNL will operate as a subsidiary of BSNL.

The package included raising Rs 15,000 crore sovereign bonds to meet the immediate capital requirements of both companies, 4G spectrum allocation worth Rs 20,140 crore, Rs 29,937 crore for VRS, covering 50 per cent of their employees, and Rs 3,674 crore for goods and services tax (GST) to be levied on allocation of radiowaves.

According to the official figures, over 92,000 employees of both the companies had availed the VRS package, that is, over 78,000 employees of BSNL and over 14,000 employees of MTNL.

Earlier, BSNL’s workforce stood at 150,000 and MTNL’s was 22,000.