A Parliamentary panel has suggested merger of state-run telecom firms Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) for their long-term survival.

The Committee on Petitions, chaired by BJP MP Bhagat Singh Koshyari, in its report tabled in Lok Sabha today, said that it is of the "considered opinion that for the long-term survival and success, merger of MTNL and BSNL would be a good proposition..."

Their merger would give both the entities a chance for competing against private sector players, it added.

The committee was formed to look into representation received by BJP MP Arvind Sawant regarding improvement in services provided by BSNL and MTNL.

The Department of Telecom (DoT) informed the panel that both the public sector firms are in financial losses and are facing declining revenues from the loss of market share and increasing expenditure.

The DoT submitted that the PSUs have not been able to invest adequately in the expansion and modernisation of their network, leading to coverage issues.

It said these firms are now taking steps to modernise their wireline and wireless networks.

The DoT informed the panel about Phase 7 and 8 network expansion plan of BSNL. On MTNL, the DoT said it has been unable to upgrade its GSM and landline network for the last three-four years due to constraint of funds but is exploring Managed Service Model with BSNL for its mobile services.

The panel said the synergies and advantages inherent in an integrated national telecom infrastructure would pave the way for the lower cost of investment and greater combined ability to face competition.

"The Committee, therefore, urges the government to embark upon the prospects of merger of MTNL and BSNL for which, initially, an Expert Committee could be constituted," it said.