25/09/04 08:33:42

Panel to decide on BSNL-MTNL merger

KOLKATA: The government is setting up a high-powered committee that will be headed by DoT member (services) Arun Saxena to appoint a consultant and merchant bankers to kick off the BSNL-MTNL merger process.

Key members of the five-member panel will include DoT member (finance) A.K. Sawhney, Department of Disinvestment (DoD) joint secretary P.K. Basu and DoT's senior deputy director-general (service units), Rakesh Kumar.

The consultant and merchant banker will be appointed from a list of 13 probables from whom this committee will shortly invite limited expressions of interest.

The list of probables is a veritable Who's Who, including the likes of HSBC, J P Morgan, the ABN Amro-Rothschild-AF Ferguson consortium, JM Morgan Stanley, McKinsey, Lazard, Boston Consulting Group, Accenture, Ernst & Young, Kotak Mahindra, ICICI Securities and SBI Caps. The list of potential consultants/merchant bankers to advise on the BSNL-MTNL integration has been prepared by the DoD.

The financial advisor will initially be asked to undertake independent valuation drills for BSNL and MTNL before deciding on the precise restructuring option. For instance, it is unknown "whether it will be a straight-ahead BSNL-MTNL merger or a case of BSNL acquiring MTNL," a top DoT source said.

Significantly, the Union communications ministry and the DoD have also drafted an eligibility code for selection of advisors to the BSNL-MTNL restructuring exercise.

According to Sanchar Bhawan circles, "maximum weightage will be given to a potential international advisor's recent experience in handling telecom mergers & acquisitions in India, commitment to the BSNL-MTNL integration process and the composition, qualification and manpower of shortlisted advisory deal teams in handling finance, legal and corporate issues".

The eligibility criteria will also include a potential advisor's local presence and understanding of the long-term strategic role of public sector telecom enterprises.

In an internal note to DoT, the DoD has also recommended that financial bids for remuneration/compensation from the 13 shortlisted companies be invited in two phases.

Source: The Economic Times