India’s Mahangar Telephone Nigam (MTNL) is looking to sell a 50% stake in wholly-owned subsidiary Millennium Telecom to fellow state-owned telco Bharat Sanchar Nigam (BSNL).
MTNL has submitted a proposal to the telecoms ministry which would see it…
India’s Mahangar Telephone Nigam (MTNL) is looking to sell a 50% stake in wholly-owned subsidiary Millennium Telecom to fellow state-owned telco Bharat Sanchar Nigam (BSNL).
MTNL has submitted a proposal to the telecoms ministry which would see it create an equally-owned joint venture with BSNL, helping both operators to cut costs, according to an Economic Times report citing an MTNL director.
The director was quoted as saying that MTNL believes Mumbai-based Millennium, with its lower tax burden, will be better placed than either its parent or BSNL to offer low-cost services.
Millennium has to pay only a very small licence fee to the government as it is not an officially-licensed telecoms operator, the report noted.
The company provides turnkey solutions in areas such as infrastructure sharing, data centre outsourcing, web hosting and cloud computing, often in response to government, corporate and private tenders.
The telecoms ministry has reportedly set a deadline of 31 July 2015 to complete a merger between MTNL, which operates in Delhi and Mumbai, and BSNL, which services the rest of India.
The ministry has also set deadlines to complete organisational restructuring plans at both telcos ahead of the merger, the Economic Times reported last week. These include a cut-off date of 31 December 2014 to spin off BSNL’s mobile towers into a separate, wholly-owned unit and to monetise some of both telcos’ property assets.
BSNL and MTNL have both been struggling in India’s crowded mobile market and, since 2010, several options have been considered to revive them, including a merger and tower sales.
Neither MTNL nor BSNL was immediately available for comment.