Skip to main content

Appearances Can be Deceptive: On MTNL & BSNL Merger


Government announced a merger between the state-owned telecom companies Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd to revive the debt-ridden telecom operators. This includes Rs15,000 crore infusion via sovereign bonds, a voluntary retirement scheme (VRS) and allocation of fourth-generation (4G) airwaves, besides an eventual merger of the two loss-making state-run operators.
From the outside perspective, the idea of integrating BSNL and MTNL sounds appropriate. But if we look closely, there is so much more to it. Merging doesn't solve the core issues of weak competitiveness and poor accountability of business. “4G spectrum will be allocated administratively at 2016 prices,” Prasad said, and added that the government will pay Rs 4,000 crore from the budget provision towards spectrum expense. But if we think about it, it’s been 5 years since telecom companies have come up with 4G services. It would be inane to come up with a 4G network when 5G is nearly here and hopes to revolutionize the way we live. No customer would shift to this service when all the private telecom companies are offering the same and with even more affordable prices.
In revenue terms, BSNL-MTNL share in the access services is 7.6%, lower than its 10.3% customer share. Financially, the two companies are in dire straits. Both the companies, MTNL and BSNL are overstaffed. BSNL is running cumulative losses of about Rs 32,000 crore in the last few years, and is finding it difficult to pay salaries to its 1.76 lakh employees. Experts argue that this situation is beyond repair and amalgaming won’t be the logical solution. The government will invest Rs 29,937 crore in this stimulation plan with the combined assets of the two companies worth Rs 38,000 crore to be monetized. The ailing companies will raise a sovereign bond of Rs 15,000 crore for their revival.

Labels:

Comments

Post a Comment

Popular posts from this blog

Significance of the “Developed Country” Tag for India

By Xeena Mehta The officials of the United States Trade Representative (USTR) uphold a list of countries that categorises countries as “developing”, “developed”, and “least-developed”. Countries that are classified as “developing” have permissions to export certain goods to the U.S. without being hit by heavy legal tariffs that are bind to be imposed on goods from “developed” countries. The “developing country” tag was originated by U.S. Trade Act of 1974, to aid poor countries develop faster. World Trade Organization also acceded to grant trade benefits to countries that were classified as poor. If noticed we can see that about two-thirds of countries that are members of the WTO classify themselves as “developing” countries and avail fore deals. Any such classification of whether a country is “developing” or not is entirely objective. While the economic progress achieved by India and China have achieved over the last few decades is seen as a valid reason to get rid of their s...
Post a Comment
Read more

Changing Environment For Local Business In Sri Lanka; Government Initiates The Revolution

Local industries and businesses are the backbone of the economy of any country. Additionally, Sri Lankan Government defines a local company as one with a minimum ownership of 51% of a Sri Lankan. To help these companies grow, the Sri Lankan Finance Ministry has proclaimed a circular enlisting the priorities to the local companies. Moreover, this move from the government may bring some salient alterations in the condition of the local manufacturers. The government has also come with up steps that will augment the local industries across the different domains. These domains include IT sector, construction, etc. The circular, as issued by the government includes relevant documentation regarding sourcing of resources and products. Additionally, sources point towards the fact that the government is hoping to extend support to the domestic sector and help them grow. Besides, the major focus is on the three sectors- IT software and hardware, construction and furniture and allied products. Pos...
Post a Comment
Read more

SECOND WAVE OF VIRUS LEFT INDIA’S HOSPITALS IN TROUBLE AS SHOTS RUN LOW.

India is facing a health crisis because of the second wave of the virus which is hitting high records. Hospitals around the country are facing a huge shortage of care beds and intensive drugs. From the wealthiest state Maharashtra to the most populated state Utter Pradesh there has been a shortage of hospital care beds and immunization centers which results in turning away people as they are running out of vaccines.  Maharashtra’s health minister Rajesh Tope has announced a strict weekend lockdown in order to control the situation. Mumbai has currently used up all but 3% of its intensive care hospital beds. Mr. Rajesh Tope has warned the state that they have three days’ worth of shots in stock and vaccination centers across the state are being forced to close down. Chief minister Punjab said that the Punjab’s vaccine will last another five days, urging the government to increase the supply. New Delhi -the capital of the country is also facing a lot of troubles due to the virus. At ...
Post a Comment
Read more