MTNL shares surge 5%; hit upper circuit on Rs 69,000-cr revival plan announcement
MTNL's scrip jumped 4.92% to Rs 6.19—its upper circuit limit on the BSE
MTNL's scrip jumped 4.92% to Rs 6.19-its upper circuit limit on the BSE
On the NSE, it rose 4.27% to its highest trading permissible limit for the day at Rs 6.10
MTNL has reported losses in nine of the past 10 years and BSNL too has been ringing in loss since 2010
New Delhi: Shares of MTNL gained 5 percent to its highest trading permissible limit for the day after the announcement of a Rs 69,000-crore revival package for the company and BSNL, that includes merging the two loss-making firms.
MTNL's scrip jumped 4.92 percent to Rs 6.19—its upper circuit limit on the BSE.
On the NSE, it rose 4.27 percent to its highest trading permissible limit for the day at Rs 6.10.
The government on Wednesday approved a Rs 69,000-crore revival package for BSNL and MTNL that includes merging the two loss-making firms, monetising their assets and giving voluntary retirement scheme (VRS) to employees so that the combined entity turns profitable in two years.
The cabinet approved a plan to combine Mahanagar Telephone Nigam Ltd - which provides services in Mumbai and New Delhi - with Bharat Sanchar Nigam Ltd that services the rest of the nation, Telecom Minister Ravi Shankar Prasad said.
MTNL has reported losses in nine of the past 10 years and BSNL too has been ringing in loss since 2010.
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.
The government will monetise MTNL and BSNL assets worth Rs 37,500 crore over a period of three years.
"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," Telecom Minister Ravi Shankar Prasad said.
Telecom Secretary Anshu Prakash said the spectrum will be allocated to both the companies administratively within a month.
In the VRS package, the government has approved Rs 17,169 crore as ex-gratia component and Rs 12,768 crore for the 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.