• BSNL and MTNL merger on the governments agenda
• Plan to review the state telecos and compete with private operators

Indian government announced the plan for merger of state telecom providers BSNL and MTNL. This $8 billion plan announced on Wednesday is to help these loss-making state telecom service providers catch up with the private operators.

“Neither BSNL-MTNL is being closed, nor is being dis-invested, nor is being hived (off) to any third party,” Federal Communications Minister Ravi Shankar Prasad told a news conference. “We want to make them competitive, bring in professionalism.”

The state telecom providers are struggling a tough competition from Reliance Jio and other private players who have already rolled 4G services as well as cheap voice calls and it is expected that this merger of BSNL and MTNL will help them to overcome this challenge..

Apart from allocating the state funded airwaves for 4G telecom services to these two companies, the two state operators will also raise $2.1 billion of long term bonds which Indian government will guarantee.

The two companies have debts of 400 billion rupees, Prasad said, with the government planning to raise 380 billion rupees by selling their assets.