BSNL, MTNL to be merged; govt will put in nearly Rs 69,000 cr for revival of two state-owned telecom firms

New Delhi: The government on Wednesday approved a Rs 68,751-crore revival package for loss-making BSNL and MTNL, including 4G spectrum allocation and voluntary retirement scheme, as well as their merger.

The Union Cabinet also approved the merger of the state-owned telecom firms and till the completion of the process, MTNL will operate as a subsidiary of BSNL, Telecom Minister Ravi Shankar Prasad said here while sharing details of the revival package.

The package includes raising of Rs 15,000 crore sovereign bonds to meet the immediate capital requirement of both the companies, 4G spectrum allocation worth Rs 20,140 crore, Rs 29,937 crore for VRS covering 50 percent of their employees, and Rs 3,674 crore for goods and services tax that will be levied on the allocation of radio waves.

"In case of BSNL and MTNL, the government's view is clear. These are strategic assets of India. The entire army network is maintained by BSNL.

"The VRS package approved by the Cabinet will give eligible employees 125 percent of income that they would have earned by serving the company till the age of 60 years. With this decision, we have taken care of the interest of lakhs of employees of these PSUs," Prasad said.

BSNL has around 1.68 lakh employees and MTNL around 22,000.

BSNL and MTNL. Pic courtesy: CNN-News18

"The VRS is voluntary; nobody can be forced to opt for it," Prasad said.

The total debt on both the companies stood at Rs 40,000 crore, of which half of the liability is on MTNL alone which operates in Delhi and Mumbai.

Both the companies have been demanding spectrum to start 4G services to remain competitive in the market.

Telecom Secretary Anshu Prakash said the spectrum will be allocated to both the companies administratively within a month.

"The spectrum allocation to BSNL worth Rs 14,115 crore will be in lieu of equity shares and about Rs 6,295 crore for MTNL in lieu of preferential shares," Prakash said.

The government will monetise MTNL and BSNL assets worth Rs 37,500 crore over a period of three years.

"The assets primarily include land assets but also rental and leasing of their buildings. MTNL has around 29 retail outlets in Delhi alone," Prakash said.

He said BSNL will also need around Rs 10,000 crore to roll out 4G services in phases and MTNL around Rs 1,100 crore.

"The debt on BSNL is the lowest. They can raise capital expenditure required for rolling out the network from the banks and bringing in efficiency in their operations," Prakash said.

In the VRS package, the government has approved Rs 17,169 crore as ex-gratia component and Rs 12,768 crore for preponement of pensionary benefit.

"Employees above the age of 53.5 years will get 125 percent of their salary which they could have earned in balance period of their service," Prakash said.

Employees in the age bracket of 50 to 53.5 years opting for the VRS will get benefit in the range of 80 to 100 percent of the remuneration to be paid in the balance period of their service.