MTNL, BSNL float JV for undersea cable business

NEW DELHI: MTNL and BSNL have finalised the structure and sorted out all issues involved in the setting up of a 50:50 JV called Millennium Telecom Company (MTL), which will oversee the building and operating of the undersea cable business of the PSUs.

Sources in both the PSUs said the shareholders agreement will be finalised next week to be signed by both partners. As per the deal between the two PSUs, MTL will only act as an infrastructure provider and not as an international long distance service provider.

Information and communication minister Dayanidhi Maran, had recently announced that in the first phase, MTL will lay a Rs 1,800-crore undersea cable to Singapore and a similar submarine link to West Asia, which will then be extended to the US and Europe, respectively. The deal, of which ET has a copy, also stipulates that in case of disinvestment of equity, the first right of equity will be given to the other partner.

Besides, both companies are also bound to sign an undertaking that they will use MTL’s infrastructure for a minimum period of 20 years.

It also states that the MTL board will be the sole authority dealing with “all matters relating to contract and speedy implementation of the project”.

“To make the board broad-based, there will be a director from the government. BSNL and MTNL will get to nominate a director each from the private sector who can contribute to the growth of the new equity. The board may have nominated seven directors,” the agreement adds. Sources add that MTL will also appoint an agency for preparing the feasibility report for the undersea links next week.