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Modi govt gives nod to BSNL, MTNL merger; to raise sovereign bond worth Rs 15,000 crore for revival

BSNL-MTNL Merger: The Cabinet has confirmed that as part of the revival plan, BSNL and MTNL's assets worth Rs 38,000 crore will be monetised

twitter-logo BusinessToday.In   New Delhi     Last Updated: October 23, 2019  | 18:34 IST
Modi govt gives nod to BSNL, MTNL merger; to raise sovereign bond worth Rs 15,000 crore for revival
BSNL-MTNL Merger: The Cabinet also gave its nod to allocate 4G spectrum to Public Sector Enterprises.

The Union Cabinet on Wednesday approved the merger of two ailing state-owned telecom companies - Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL). The Cabinet, headed by Prime Minister Narendra Modi, also announced revival plan for the both the telcos. Briefing reporters on decisions, Telecom Minister Ravi Shankar Prasad said the government would put in Rs 29,937 crore for revival of the two state-owned telecom companies and their assets worth Rs 38,000 crore would be monetised.

Also read: BSNL is in strategic interest of nation, says Ravi Shankar Prasad

The Cabinet also gave its nod to allocate 4G spectrum to Public Sector Enterprises to enable them to provide broadband and other data services. "The said spectrum will be funded by the Government of India by capital infusion in these PSUs at a value of Rs 20,140 crore in addition; the GST amount of Rs 3,674 crore to this spectrum value will also be borne by the Government of India through Budgetary resources," said a government statement said.

Prasad also said the government planned to raise a sovereign bond of Rs 15,000 crore for their revival. Additionally, the government will offer a voluntary retirement scheme to the employees of these companies to cut cost, said Prasad. "BSNL and MTNL will also offer voluntary retirement to their employees, aged 50 years and above through attractive Voluntary Retirement Scheme, the cost of which will be borne by the government of India through budgetary support," the statement said.

The ex-gratia component of VRS will require additional funds of Rs 17,169 crore. The government will also meet the cost towards pension, gratuity and commutation.

In a statement, the office of Ravi Shankar Prasad tweeted the merger would be "operationalised gradually". MTNL will be become a subsidiary of BSNL till the merger is completed. "BSNL and MTNL are strategic assets of India. They cater to the needs of people during disaster. They provide important communication services to government," it stated.

The statement said the Modi government had offered a "very generous financial assistance to revival BSNL and MTNL". Prasad has urged the employees of both these PSUs to work hard and help the government in making these organisations profitable. Both the companies have a collective debt of Rs 40,000 crore.

Edited by Manoj Sharma

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