Date:27/10/2004 URL: http://www.thehindubusinessline.com/2004/10/27/stories/2004102701410400.htm

Back `MTNL-BSNL merger by mid next year'

Our Bureau

Mr Dayanidhi Maran

Mumbai , Oct 26

THE Union Government plans to complete the merger of public sector telecom companies MTNL and BSNL by mid next year, Mr Dayanidhi Maran, Union Minister of Communication and Information Technology, said here on Tuesday.

"Six merchant bankers will make presentations to the Union Government this month-end and modalities for the merger will be worked out within the next three or four months," Mr Maran told reporters here.

If merged, the combined entity will have a turnover of Rs 35,000 crore compared to its largest private sector rival Bharti Tele-Ventures, which has a turnover of Rs 5,000 crore. BSNL and MTNL together command over 95 per cent of the fixed line market share.

Mr Maran categorically denied any plans to sell Government stake in telecom PSUs. "The Common Minimum Programme is very very clear. We are not interested in selling profit-making PSUs. Even loss-making PSUs, will not be sold, we will try to revive them instead," he said.

Earlier, the Minister told delegates at the International Conference of Telecom that the Indian telecom sector would need estimated additional investments worth roughly Rs 1,60,000 crore to meet the target of 200 million telephones by 2007.

Mr Maran expressed concern about Indian companies not paying attention to indigenous manufacturing of telecom equipment and R&D, especially as duties on telecom equipment will be zero from April 2005. "I am concerned that even as we are planning major investments in this sector, our own companies are not in a position to take advantage of such investments and that the benefit will accrue to other countries," he said.

Sony Ericsson, Alcatel, LG and Samsung have shown interest in setting up manufacturing base in India to take advantage of cheap labour in India. He said so far the Indian telecom industry has attracted foreign direct investments worth only $ 2.5 billion. The Government is currently working to increase FDI inflow to the sector. The recent announcement to increase FDI limit from 49 per cent to 74 per cent is a step in that direction, he said.

When asked about unbundling of the local loop, he said this model has not worked in the US or the UK. He said the Government plans to provide customers with 24-hour access to broadband at 256 kbps for less than Rs 500 per month compared to the 64 kbps speed available today.