Even though a high-level committee recommended divesting of its shares to a strategic partner who could bring in technical expertise among other synergies to beat increasing competition about two years ago, NT is far from signing up such a partner. [break]
The result is ominous: It´s been almost a year since private operator Ncell has wrested leadership position from NT in the mobile telephony segment.
The process to invite a strategic partner for NT has been stuck for a long time. It´s already about two years since the high-level committee advised the government to invite a strategic partner for NT but no progress has been recorded on the matter. The committee had also suggested NT to allow such a partner take at least 26 percent equity in the company.
The recommendations were in light of growing competition from private operators and examples of state-owned operators in Bangladesh, Sri Lanka and Pakistan, which forged such strategic partnerships to survive the tough competition. Privatization committee had formed a sub-committee in May last year to seek a strategic partner for the state-owned telecom operator.
Secretary at Ministry of Information and Communications (MoIC) Shreedhar Gautam said the ministry is waiting for the committee to give its go-ahead. "A proposal to Ministry of Finance was sent over a year ago in which NT expressed willingness to divest a portion of its equity to the private sector but we have not heard any update on the proposal from the ministry," he said.
He said privatization is a must before inviting a strategic partner. "State-owned operator has to comply with Public Procurement Act, which is often creating hassles in the procurement process," he said adding that in a situation like this, it´s very difficult to get strategic partners. Even if a strategic partner comes on board, it will have to follow Public Procurement Act, which makes the procurement process lengthy. This is a setback for rapidly advancing telecommunication industry, he said.
Hari Rokka, who is the coordinator of the privatization committee, which has to decide about inviting a strategic partner, said nothing has happened so far because of lack of political consensus. "I can´t call a meeting unless the Finance Ministry asks me to do so and no decision can be made unless there is a meeting."
He further stressed the need for a political consensus.
NT which is still the largest telecom operator in the country lost its leadership position in the GSM segment to private operator Ncell about a year ago.
Speaking at a meeting of the Public Accounts Committee earlier this week, NT MD Amarnath Singh had stressed the need for privatization of NT. "We are waiting for the green signal from the privatization committee to go ahead as it´s getting tough to compete with private operators who can take instant decisions and can infuse huge investments," he said.
He further said simply going in for privatization or inviting a strategic partner will not make NT a strong operator. "Privatization and involvement of strategic partner is both needed to resist the growing competition," he said.
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