Mukesh Ambani's Jio, Sunil Bharti's Airtel to face tough competition as BSNL-MTNL to bring...

Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited have signed an important strategic ten year service partnership in an effort to boost the telecommunications business in India especially in capital regions such as Delhi and Mumbai. This partnership is timely for MTNL especially after its establishment recorded an outstanding debt of Rs 31,994. 51 crore and some operational issues.

The agreement was okayed in a recent board meeting of the MTNL wherein other related items were passed for the sale of shares in its overseas subsidiary Mahanagar Telephone (Mauritius) and the shutting down of Millennium Telecom Ltd., a hundred percent subsidiary of the MTNL.

The agreement may be renewed with the prior written consent of both parties and the Department of Telecommunications (DoT) or the Ministry of Corporate Affairs, and the agreement may be terminated by six months’ prior notice in writing. However, the deal is at this moment suspended as the DoT considers the possibility of taxes as well as the overall expenses of the agreement. The government is careful not to impose any more liabilities on BSNL or MTNL because the former is also servicing sovereign bonds.

This scrutiny is due to the government’s adherence to fiscal prudentialism to cater for state owned enterprises. BSNL needs this partnership to improve its network’s infrastructure, especially in the implementation of 4G and 5G. The company has also started the early trials of 5G which means that it could soon launch it and this will enhance the quality of services being offered to the users. Jyotiraditya Scindia the Union Minister has admitted that the upgradation of BSNL’s network has been slow but added that measures are being taken to improve the service conditions.

This partnership is a competitive threat to the large players in the Indian telecom sector like Reliance Jio, Airtel, and Vodafone especially in the backdrop of the recent increase in the tariffs of telecom services. The deal is expected to offer inexpensive internet services to millions of people as the demand for connectivity in cities is on the rise.