MTNL, BSNL to evaluate Zain acquisition independently
The two government-owned telecom service providers BSNL and MTNL are singing different tunes on the proposed acquisition of Kuwait-based telecom giant Zain.india Updated: Sep 15, 2009 21:37 IST
The two government-owned telecom service providers Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) are singing different tunes on the proposed acquisition of Kuwait-based telecom giant Zain. Both companies have decided to independently evaluate the offer of buying equity in Zain by joining a consortium led by Delhi-based Vavasi Telegence Ltd.
Earlier, both companies were jointly working on the deal. They had set up a high-level committee comprising of eight deputy director general (DDG) level officers — four from BSNL and MTNL each — to evaluate the deal. Two weeks later, they have realised that both face different market conditions and different challenges.
“We are looking into the proposal and no final decision has yet been taken,” BSNL chairman and managing director (CMD) Kuldeep Goyal told Hindustan Times. Goyal said that the joint committee still exists and he would take its opinion whenever we needed.
MTNL CMD R.S.P. Sinha refused to comment on the issue.
“We are not aware of any such proposal,” department of telecommunications secretary Siddharth Behura told Hindustan Times. “The government has not yet received any proposal from any party.”
The financial strengths of the two companies are different. BSNL has cash reserves of about $7 billion (about Rs 34,000 crore), while MTNL’s reserves stand at $1.5 billion (Rs 7,300 crore).
Besides finances, there are other structural and geographical differences too — MTNL operates services in Delhi and Mumbai; BSNL provides services throughout the country except the two metros. MTNL is a listed company, while BSNL is unlisted.
“The two PSUs have huge amount of cash and cash lying in a company is not productive,” said B.K. Syngal, former CMD of Videsh Sanchar Nigam Ltd (now Tata Communications Ltd). “Zain has a growing business and therefore provides good opportunity to BSNL and MTNL.”
“If the two companies are able to get management control of Zain, it would given them an experience of working in international markets and would have a positive impact on their operations in India,” said Mahesh Uppal, director, Comfirst India.