BSNL-MTNL divestment: progress, outlook and implications

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?