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Business

BSNL and MTNL revival plan: Government approves in-principle merger, assets worth Rs 38,000 crore to be monetised

Updated : October 23, 2019 05:18 PM IST

Rs 15,000 crore worth of sovereign bonds will also be raised to be serviced by MTNL and BSNL

The government has decided to give a fillip to state-run telecom firms BSNL and MTNL. Assets worth Rs 38,000 crore will be monetised in the next four years, according to communications minister Ravi Shankar Prasad.

Ravi Shankar Prasad added that Rs 15,000 crore worth of sovereign bonds will be raised to be serviced by MTNL and BSNL and expressed hope that in two years both the companies will be profitable.

Along with this, the government has also approved the in-principle merger of BSNL and MTNL. MTNL will act as a subsidiary of BSNL until the merger goes through.

Also, 4G spectrum will be allocated to the telcos at 2016 prices.

Ravi Shankar Prasad also announced that an "attractive" VRS package would be introduced for the employees of both the telecom firms.

It is noteworthy that the DoT sent a proposal to the cabinet for a revival plan worth Rs 74,000 crore for the ailing state-run telecom firms - BSNL and MTNL - where Rs 22,000 crore would be in the way of capital infusion for acquiring 4G spectrum, and for a voluntary retirement scheme (VRS), part of the expenditure for which will be borne by both companies.

The Department of Telecom (DoT) move followed the appointment of a high-level committee to look into the revival of MTNL and BSNL, an official source said on Tuesday.

"The total package is Rs 74,000 crore. The 4G spectrum allocation funds of Rs 22,000 crore (Rs 16,000 crore for BSNL and Rs 6,000 crore for MTNL) will be the capital infusion. The rest of the funds will for their VRS, which they will also bear in part", he added.

BSNL, which is yet to pay employee salaries, has a monthly bill of Rs 850 crore on this count, and has a staff 1.76 lakh on its rolls. While the company generates monthly revenues of Rs 1,600 crore, a major chunk of this is used for operational and statutory payments, which has caused the delay in paying salaries. The company also posted a net loss of Rs 13,804 crore in fiscal 2018-19.

Earlier, a group of ministers headed by Home Minister Amit Shah had approved the revival plan proposed by the DoT for both the companies.

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