BSNL, MTNL to be merged; Cabinet approves revival plan


In a major step to revive loss-making BSNL and MTNL, the Union Government on Wednesday decided to merge the two ailing telecom PSUs as part of a revival package that include allotment of spectrum for 4G services, raising sovereign bonds, monetising assets and voluntary retirement scheme (VRS) for employees.

The revival package for BSNL and MTNL includes raising of ₹15,000 crore sovereign bonds and monetising ₹38,000 crore of assets in next four years.

BSNL has 1.76 lakh employees across India while MTNL has around 22,000 employees. The employee cost of BSNL is 75% and that of MTNL is 87% of their total income.

Pending the merger, MTNL will act as a subsidiary of BSNL.

The Cabinet also approved allocation of 4G spectrum on an administrative allocation basis, which will be done at 2016 prices.

By using this spectrum allotment, BSNL and MTNL will be able to deliver 4G services, compete in the market and provide high speed data using their vast network including in rural areas.

BSNL and MTNL will also raise long-term bonds of Rs 15,000 Cr for which sovereign guarantee will be provided by the Centre. With the said resources, BSNL and MTNL will restructure their existing debt and also partly meet CAPEX, OPEX and other requirements.

BSNL and MTNL will also offer Voluntary Retirement to their employees, aged 50 years and above through attractive Voluntary Retirement Scheme (VRS), the cost of which will be borne by the Government through budgetary support. The ex-gratia component of VRS will require Rs. 17,169 Cr in addition, the government will be meeting the cost towards Pension, Gratuity and Commutation.

BSNL and MTNL will monetise their assets so as to raise resources for retiring debt, servicing of bonds, network upgradation, expansion and meeting the operational fund requirements.

It is expected that with the implementation of said revival plan, BSNL and MTNL will be able to provide reliable and quality services through its robust telecommunication network throughout the country including rural and remote areas.


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