BSNL-MTNL Divestment: Progress, Outlook and Implications

Abstract

Speculation around India' s BSNL - MTNL divestment and merger has been rife for many years. This report highlights recent developments, assessing the future outlook and impact on BSNL and MTNL, their attractiveness as investment opportunities, and the implications for industry dynamics.

Table of Contents

• Executive summary
• In a nutshell
• Key messages
• Political opposition and employee resistance have been the primary hurdles
• While uncertainty for BSNL lingers on, MTNL divestment is off the table
• BSNL - MTNL merger is a distant possibility
• Privatisation is the only viable long-term option
• Dubious investment appeal, which divestment can do little to change
• Privatisation presents high return potential, but daunting change management challenges
• Private sector players are unlikely to be affected by divestment
• BSNL - MTNL merger may be a blessing in disguise for private sector players
• Implications of privatisation on industry dynamics
• Background and recent developments
• Political and employee resistance causing delays
• Future outlook
• BSNL divestment: uncertainty lingers on
• Political situation
• Fiscal imperatives
• Capital requirements
• Employees' resistance
• Company performance
• Capital market meltdown
• MTNL divestment not on the table
• BSNL - MTNL merger a distant possibility
• Privatisation: economically feasible but politically impossible
• BSNL and MTNL' s investment appeal
• BSNL and MTNL as stand-alone companies
• BSNL: 10% divestment too little too late
• MTNL: not a crown jewel in reality
• BSNL - MTNL as a merged company
• Mired with risks and uncertainties
• BSNL and MTNL as privatised companies
• A Herculean undertaking with high return potential
• Implications for industry dynamics
• Will the elephant dance?
• 3G rollout
• WiMAX rollout
• Rural market expansion
• Would further divestment in MTNL make it more competitive?
• Is the BSNL - MTNL merger a threat or an opportunity?
• Can privatisation change the face of the industry?