In a bid to consolidate the position of its public sector telecom companies, the government may consider 5 per cent divestment in Bharat Sanchar Nigam Ltd before looking at the option of merging it with Mahanagar Telephone Nigam Ltd.

Immediately after taking charge, Telecom Minister Dayanidhi Maran and his junior Shakeel Ahmed were presented with numerous suggestions including merger of the two telecom PSUs and 5 per cent divestment in BSNL to assess the company's market value.

When contacted, Ahmed said: "We have received various suggestions. We will look at each option and consider them on merit in the next two months. Whether or not to go for merger will be considered by the Cabinet minister before we come out with our opinion," he said.

The suggestion for 5 per cent divestment came during the meetings the two ministers had with officials in the department and PSUs on the ground that while MTNL was a listed company, BSNL was a closed entity and such divestment might be in tune with the option of merging the two entities.

Yet another suggestion that came up during the consultations was for creating a holding company to synergise the operations and safeguard the commercial interests of the two profit-making PSUs.

Both MTNL and BSNL have earlier expressed their desire to enter in each other's territory and both have made numerous presentations to the Department of Telecommunications.

Since BSNL has been offering a wide range of telecom services in the entire country but two most lucrative markets of New Delhi and Mumbai, it has expressed desire to enter these areas while on the other hand, MTNL has been stagnating due to restrictions on operating only in Delhi and Mumbai.

Among other things, Ahmed said, the ministry was looking at offering incentives for manufacturing handsets in India to create employment opportunities here.

Every month 2 million mobile phones are being added and at an average cost of Rs 3,000 per handset, India is losing up to Rs 600 crore (Rs 6 billion) to import them from various multinational companies.

"We are planning to take up the matter with the ministry of finance to consider incentives for manufacturing companies to set up facilities in India," he added.

He, however, said that all these suggestions were being considered by the ministry and a final decision was expected in a couple of months.