Diwali Bonanza By Modi Govt! Cabinet Approves BSNL-MTNL Merger With 4 Way Revival Package

The move comes as part of a revival package for the state-owned telcos that includes raising sovereign bonds, monetising assets and voluntary retirement scheme (VRS) for employees.

After the merger, MTNL will act as a subsidiary of BSNL. (File Photo/ Getty)

New Delhi: With an attempt to revive the loss making telecom Public Sector Units (PSUs), the Union Cabinet on Wednesday has finally given a nod to merge the two ailing firms Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL). The move comes as part of a revival package for the state-owned telcos that includes raising sovereign bonds, monetising assets and voluntary retirement scheme (VRS) for employees. According to reports, the revival package for BSNL and MTNL includes raising of Rs 15,000 crore sovereign bonds and monetising Rs 38,000 crore of assets in next four years. After the merger, MTNL will act as a subsidiary of BSNL. Briefing reporters on decisions taken by the Cabinet headed by Prime Minister Narendra Modi, Telecom Minister Ravi Shankar Prasad said the government will put in Rs 29,937 crore for revival of the two state-owned telecom companies. Also, voluntary retirement will be offered to employees to cut cost, he said. "BSNL & MTNL will raise a sovereign bond of Rs 15,000 crore for their revival and assets of both the PSUs worth Rs 38,000 crore will be monetized. The cabinet also approved an attractive VRS package for the employees which has been slightly tweaked from the original Gujarat model. Government will provide 4G spectrum on an administrative allocation basis. The cabinet has also given in-principle nod to the merger of BSNL and MTNL and till modalities are in place, MTNL will be a subsidiary of BSNL," he said. Prasad also announced that 4G spectrum will be allocated to BSNL and MTNL adding that government will offer an attractive VRS package for employees in both the companies. Cut-throat competition and entry of Jio on free voice and cheap data prices led to consolidation in the Indian telecom sector with many small telcos shutting shop under losses and currently only Jio, and Airtel are left along with the merged entity of Vodafone and Idea. MTNL is listed but has its net worth already eroded. BSNL is unlisted. MTNL operates in Delhi and Mumbai while BSNL operates in rest of India and mostly in the hinterlands. The PSUs' merger have been discussed many times earlier in the last 10 years but due to HR and listing issues, it never could be taken up. BSNL has an estimated loss of Rs 14,000 crore in 2019 fiscal and MTNL has been in deep losses. BSNL is a 3G mobile player with sporadic 4G services on hotspots and on old 1900/2100 spectrum bands. It has 12 crore mobile subscribers and a 11 per cent market share.