India’s stated-owned telecoms operators – BSNL and MTNL – are among ten loss-making companies the new government is considering closing.
The Economics Times reported yesterday that officials were due to meet today to discuss the future of the ten firms, which had a combined net loss of INR245 billion ($4 billion) last fiscal year.
The move is part of Prime Minister Narendra Modi’s efforts to promote growth and reduce the government’s stakes in unprofitable firms. The Economic Times said the central government owns about 260 companies, and thousands more at the state level.
But any move to shut down the enterprises – particularly BSNL with 245,000 employees (MTNL has 45,000) — will be met with strong opposition from labour unions, which have long fought any privatisation efforts.
The government has set a privatisation target of INR630 billion ($10.4 billion) for fiscal 2014/15 – almost four times its total divestment in the last four years, the Economic Times said.
Two weeks ago 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.
MTNL offers services in Delhi and Mumbai and has just three million connections (less than 1 per cent market 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.