Mahanagar Telecom Nigam (MTNL) surged more than 17 per cent on an intraday basis on Wednesday to close at Rs 26.10 on NSE. The sharp surge is due to BSNL, MTNL merger plan being back on the discussion table.
After such a long time, the proposal to merge BSNL and MTNL is back on the discussion table with top officials at the Ministry once again weighing various options before the two loss-making state-owned entities merge. The merger talks have been initiated on the back of consolidating the telecommunication sector.
According to sources close to the development, a top-level meeting recently discussed possibility of merging both the entities that are facing financial stress due to increasing competition in the sector.
BSNL is keen on picking up mobile operations of MTNL in Gurgaon, Noida and Faridabad, where it is already offering landline and broadband services. The other option could be the acquisition of MTNL's mobile operations in Delhi and Mumbai - the two metros it operates in.
MTNL is debt-laden and the merger move will be positive for it, while BSNL will have to bear the brunt. The company has total debt of Rs 19418 crore as of the end of Q3FY17.