India’s state-owned MTNL has proposed selling a 50 per cent stake in its Millennium Telecom subsidiary to BSNL, to form a venture to offer services as part of the new government’s Digital India initiative.
The main thrust behind the proposal to the country’s Department of Telecommunication (DoT) is that Millennium, which isn’t a licensed telecoms operator, would not have to pay 8 per cent of its revenue from the project as a licence fee, the Economic Times reported. Either of the state-owned firms would have to pay the fee if they were involved directly.
The suggestion to create a joint venture to develop digital services comes only a few days after the DoT set a deadline of 31 July 2015 to complete the long-mooted merger of BSNL and MTNL, two struggling state-owned companies.
The telecoms ministry aims to secure cabinet approval for the merger by 30 June next year.
The Times reported that in a presentation to the telecom secretary, MTNL said the move “can put both struggling telecom companies on the path of revival based on the promise of sizeable fresh revenue streams”.
The DoT reportedly has approved the joint venture idea in principle, but had not had official acknowledgement from BSNL. A BSNL executive said it is evaluating MTNL’s offer.
MTNL offers services in Delhi and Mumbai and has three million connections (less than 1 per cent share) while BSNL has coverage in the rest of India and 93 million connections (10 per cent share), according to the latest figures from GSMA Intelligence.