Quasi-merger proposal for BSNL, MTNL

PSU majors may be split into four regional ventures

The Department of Telecommunications (DoT) is exploring the option of a quasi-merger of Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL).

Modelled on the famous Baby Bells formula, adopted by the US government in the case of AT&T, the plan involves forming four regional wireline access companies "" one in each region.

Under the Baby Bells formula, AT&T was spilt into seven companies, which resulted in an exponential growth in the US telecom sector and created huge business and employment opportunities.

"The ministry is revisiting the Baby Bells model, which, if implemented, will help in carving out four regional wireline companies, a mobile operator and an infrastructure company from BSNL. All these firms would also be brought under the ambit of a new holding company," sources in the ministry told Business Standard here today.

The four regional wireline access companies would be BSNL North, BSNL East, BSNL South and BSNL West. Under the plan, MTNL's wireline operations in Delhi would be merged with BSNL North and Mumbai operations with BSNL West.

The mobile operations of BSNL, along with that of MTNL, would be transferred to a separate company, BSNL Mobile, thus giving the public sector units (PSUs) a pan-India mobile footprint.

Additionally, a new company "" BSNL Infrastructure "" may be formed, which would own and operate the BSNL infrastructure for both national long distance and international long distance. All these companies would be controlled by an investment arm, BSNL Holdings.

The ministry is likely to discuss this proposal with the DoT next week and later with the office bearers of Indian Telecom Service Association. Further deliberations will be conducted with officials in the government, with the demerger process to be initiated by the end of this financial year.

THE BLUEPRINT

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• BSNL to get four wireline subsidiaries - BSNL North, BSNL East, BSNL South and BSNL West
• MTNL's Delhi operations will be brought under BSNL North and Mumbai operations under BSNL West
• All mobile operations of BSNL and MTNL would be transferred to a separate company, BSNL Mobile