Will BSNL, MTNL, C-DoT, ITI and TCIL join forces?

The department of telecom (DoT) is said to be planning a grand alliance between the government owned service providers, BSNL and MTNL, along with research body C-DoT, gear maker India Telephone Industries (ITI) and Telecommunication Consultants of India Ltd (TCIL). It is being felt that such an alliance could improve the financial condition of these PSUs by creating greater operational synergies.

Once the grand alliance is in place, the companies will share their telecom assets and buy products and services at preferential rates to optimise central sector resources and withstand competition from private sector rivals. The nitty-grittys of the alliance are still being worked out, but the overall intention is to create a seamless value chain where C-DoT will handle product development while ITI will do all equipment production which will eventually be bought by BSNL and MTNL.

Earlier there had been a suggestion from the Board for Reconstruction of Public Sector Enterprises (BRPSE) to merge the three loss-making state-run entities - ITI, MTNL and BSNL. But the government is still undecided on that issue. In the 12th plan the telecom department has sought 378 crore to upgrade ITI's production facilities while TCIL will work as a nodal agency for promoting and executing offshore telecom projects in countries with which India has strong bilateral ties. BSNL and MTNL are expected to work closely with TCIL for execution of such overseas projects.

However, a section of officials in the government believe the proposed alliance is unlikely to work unless the respective boards of member PSUs are given adequate autonomy. "Any alliance that aims to unlock operational efficiencies can only work if these telecom PSUs come out of the shadow of their administrative ministry and are truly managed by independent boards. Only then, will commercial decisions be taken," said an official had who sat in at recent telecom department meetings where the proposed alliance was discussed.

The feeling has also been expressed that entire concept is flawed since there are no real synergies between the proposed alliance partners. After all BSNL and MTNL is loss making entities. C-DoT is an R&D company that has not done any significant research for decades. ITI happens to be a virtually defunct telecom gear maker. What kind of advantage can be accrued from any alliance between these companies?

Adidas NMD