The Department of Telecommunications (DoT) is planning to merge state-run entities Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) by 2016. This comes in line with the government’s strategy to revive the financial health of state-run companies.

The other measures taken by the government to revive BSNL and MTNL include a waiver of Rs 14.11 billion in form of a government loan to BSNL and financial support of Rs 67.24 billion to BSNL as well as Rs 45.33 billion to MTNL on surrender of its broadband spectrum.

The total debt of the two firms stood at Rs 212.08 billion for the quarter ended June 2014.  In terms of market share, BSNL’s market share has reduced from 13.27 per cent in March 2012 to 12.3 per cent in May 2014. MTNL’s market share stood at 4.83 per cent in May 2014.

The Ministry of Communications and IT is of the view that the reasons for the decreasing market share of the two firms include lack of coverage expansion owing to financial and procurement problems and lack of adequate skills set due to changing nature of technology. In addition, increased competition with private entities has also impacted BSNL and MTNL.