MTNL is likely to be merged with BSNL as part of a revival plan approved by the Telecom Ministry for the two companies. The government would conduct the merger after sorting out issues such as human resources.
The BusinessLine report said that MTNL would be converted into a subsidiary of BSNL following the merger.
“A joint committee will be put in place to oversee the entire process over the next 18 months, according to a memo approved by Telecom Minister Ravi Shankar Prasad,”
This merger has various challenges. And, one of the most challenging parts will be concerning the employees. “Being a public sector entity, this challenge is manifold. It needs to be seen how the Government and DoT can navigate through the hurdles and succeed in merging the two entities. A successful merger will be good for all, including its employees.
BSNL and MTNL were unable to pay salaries to their employees for the month of February. Both the PSUs recently approached the government for financial support and to resolve legacy issues.
Due to hyper-competition in the telecom sector, both the firms have been incurring losses for several years. The situation has worsened because of a huge employee cost due to which expenditure has hit the roof while revenues have nosedived. For BSNL, about 55% of its expenditure goes into employee salaries as it has a huge base of 1.76 lakh employees across India.