How Can BSNL And Vodafone-Idea Merger Help In Sustaining Their Operations In India?

BSNL and Vodafone-Idea are struggling in the telecom industry. In fact, both are facing financial issues, which is why several analysts believe that both entities should be merged if they want to sustain and run operations smoothly.

Similarly, Aftab Ahmed Khan, president, Sanchar Nigam Executives Association (SNEA) said that BSNL should have a pan India roaming pact with Vodafone-Idea.

"There is a need to have a synergy between the two telecom service providers. Since BSNL have no 4G, it may be a better option to have a pan-India roaming agreement with Vodafone Idea so that our subscribers can latch onto its high-speed data network," Aftab Ahmed Khan, president SNEA was quoted by ET.

SNEA, a Delhi-based group, has more than 13,000 executives. Notably, Bharat Sanchar Nigam Limited is also operating networks of another PSU MTNL in two circles, i.e. Mumbai and Delhi. However, the telecom operator has not received a 4G spectrum or airwaves from the Government.

Vodafone-Idea Merger With BSNL

This statement comes soon after several reports claim that Kumar Mangalam Birla wants to sell his stake to a public sector utility before the telecom operator collapsed. Similarly, Frankfurt-based Deutsche Bank said that Government should come up with some measures to merge to ailing telecom operators (BSNL and Vodafone-Idea).

"The only viable solution is for the government to recapitalize Vi by converting its debt into equity, preferably while merging it with BSNL, and then providing it a clear commercial mandate based on profitability targets and incentives," Deutsche Bank notes said.

AIGETOA Views On BSNL And Vodafone-Idea Merger

All India Graduate Engineers & Telecom Officers Association also said that the two companies can capture significant market share in the telecom industry. The firm said that BSNL has no 4G infrastructure so that Vodafone-Idea 4G network can be used.

However, it is important to note that Kumar Mangalam Birla has resigned from his post and Himanshu Kapania will take a charge of the firm. Both firms are in deep crisis, but, Department of Telecommunication will take a final call on the merger.

One should not forget that earlier, DoT was planning to merge BSNL and MTNL; however, the debt of the latter has forced the ministry not to take this decision. Similarly, there is a huge difference between BSNL and Vodafone-Idea debt, so let's wait and watch what decision DoT will take.