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BSNL & MTNL to stay separate

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CIOL Bureau
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NEW DELHI: India has no plans yet to merge two state-run telecoms firms, Bharat Sanchar Nigam Ltd (BSNL). and Mahanagar Telephone Nigam Ltd. (MTNL), the communications minister has informed.

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Unlisted BSNL, India's largest telecom firm by sales, provides fixed-line and mobile services across the country except in the two main markets of Delhi and Bombay, where New York Stock Exchange-listed MTNL operates.

"We are not even going in that direction," Communications Minister Dayanidhi Maran told reporters on the sidelines of an industry event.

New Delhi-based BSNL is wholly owned by the government, which also has a 56.25 percent stake in MTNL.

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Both MTNL and BSNL compete with private players such as Bharti Tele-Ventures Ltd, 28-percent-owned by Singapore Telecommunications Ltd, in India's cutthroat wireless industry, the world's fastest growing major mobile market.

India has more than 80 million telephone users, but the main driver of growth is cut-rate mobile services, which are attracting more than 1.2 million customers each month thanks to some of the lowest call charges in the world.

But the cash-guzzling sector is starved of funds for much needed expansion as most Indian carriers are making losses and are unable to raise funds at low costs.

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Maran said he supported Finance Minister P Chidambaram's budget proposal to raise the foreign investment cap in telecom firms to 74 percent from 49 percent as the hike would attract cheaper funds and foreign carriers into the industry.

But the plan faces opposition from leftist parties who lend crucial support to the coalition government from outside.

Maran added that he did not foresee a problem in hiking the limit despite the resistance. "We are not doing anything wrong. We do not see a problem."

Analysts estimate the sector needs about $50 billion by 2012 to raise phone penetration to global levels.

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