Government Begins Delisting Of MTNL In Preparation For Its Merger With BSNL

The government has begun the process to delist Mahanagar Telephone Nigam (MTNL) from the stock exchanges in an effort to clear the way for a merger between Bharat Sanchar Nigam (BSNL) and that company. MTNL will be delisted from the foreign exchange as part of the initial phase, according to persons with an understanding of the scenario. MTNL initially listed its American depository shares (ADSs) on the NYSE in 2001; then were then delisted, and in 2013, they were listed on the OTCQX International Market.

Although the process to combine the two businesses is anticipated to take around two years, the proposal is to merge MTNL's operational business with BSNL, which encompasses MTNL's telecom business, including wireline, wireless, and the enterprise business, as well as operational assets. The government would also delist MTNL shares from the Indian stock exchanges after acquiring 90% of the company's shares.

In terms of the merger plan, MTNL will be divided into three parts: operations, staff, and operational assets; other assets and liabilities, including the spectrum held by MTNL; and operations of Mahanagar Telephone Mauritius (MTML), which is currently operating profitably.

According to a government official, “BSNL will take over staff and operational assets, and operations of MTNL Mauritius, whereas MTNL will continue to hold other assets and liabilities including the spectrum,”  Nevertheless, BSNL will not take over the spectrum that is currently held by MTNL.

The official stated that “No liabilities of MTNL will be transferred to BSNL,” adding that discussions over other issues are ongoing and that the process would take a few years to complete.

Twenty years ago, the government proposed merging the entities in an effort to save money and revitalize the companies. Due to competition from the sector's private competitors, the enterprises began to experience financial pressure.

According to reports, Deloitte, a consulting and auditing firm, was recently chosen by the government to serve as the transaction advisor. This examination of the merger is anticipated to be submitted in the following six to seven months.

“For taking over operations of MTNL along with staff and assets, BSNL will pay a certain amount to MTNL. Other assets and liabilities will be with MTNL and accordingly will be attempted for sale to clear the debts,”  other assets and liabilities will be with MTNL and correspondingly will be attempted for sale to clear the debts" BSNL will also acquire land of MTNL valued at Rs 12,000 crore as well as some exchange buildings, among other things.

There are currently 3,508 people working for MTNL in Delhi and Mumbai; as part of the merger, all of these people will join BSNL, according to sources.

The government approved the Rs. 1.64 trillion revitalization package for MTNL and BSNL in July of last year. The government had stated in the Cabinet note that it will convene a committee of secretaries from various ministries to decide whether to merge the two businesses.