BSNL,MTNL to be merged, VRS package to be offered to employees

[Kool_SRG]

MTNL and BSNL are neither being closed nor divested: Govt

• The revival package for BSNL and MTNL includes raising sovereign bonds, monetising assets and voluntary retirement scheme (VRS) for employees

The Union Cabinet today approved merger of loss-making telecom firms BSNL and MTNL as part of a revival package that includes 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.

"BSNL and MTNL will raise a sovereign bond of ₹15,000 crore for their revival and assets of both the PSUs worth ₹38,000 crore will be monetized. The Cabinet also approved an attractive VRS package for the employees. Government will provide 4G spectrum on an administrative allocation basis. The Cabinet has also given in-principle nod to the merger of BSNL and MTNL and till modalities are in place, MTNL will be a subsidiary of BSNL," Telecom Minister Ravi Shankar Prasad said at the briefing after the cabinet meeting.

MTNL is listed but has its net worth already eroded. BSNL is unlisted. MTNL operates in Delhi and Mumbai while BSNL operates in rest of India and mostly in the hinterlands.

State-owned operators BSNL and MTNL saw 2.15 lakh and 6,701 subscribers exiting their networks in August respectively.

As on August 31, private operators held held 89.78% market share of the wireless subscribers whereas BSNL and MTNL, the two PSU access service providers, had a market share of only 10.22%, according to latest TRAI data.

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Govt approves BSNL-MTNL merger, allocates 4G spectrum to the group

The PSUs' merger have been discussed many times earlier in the last 10 years but due to HR and listing issues, it never could be taken up.

HIGHLIGHTS

• The allocation of 4G spectrum to them would be done at 2016 prices and administratively.
• The government is said to invest Rs 29,937 crore in this revival plan .
• MTNL operates in Delhi and Mumbai while BSNL operates in rest of India.

 

The government has finally given a green signal to the merger of two ailing telecom companies--MTNL and BSNL-- along with the much-awaited 4G spectrum allocation to the two companies. The approval came on Wednesday from the union cabinet.

The government is said to invest Rs 29,937 crore in this revival plan with the combined assets of the two companies worth Rs 38,000 crore to be monetized. The ailing companies will raise a sovereign bond of Rs 15,000 crore for their revival.

The allocation of 4G spectrum to them would be done at 2016 prices and administratively.

"The cabinet also approved an attractive VRS package for the employees which has been slightly tweaked from the original Gujarat model. Government will provide 4G spectrum on an administrative allocation basis. The cabinet has also given in-principle nod to the merger of BSNL and MTNL and till modalities are in place, MTNL will be a subsidiary of BSNL," Telecom Minister Ravi Shankar Prasad said at the briefing after the cabinet meeting.

Cut-throat competition and entry of Jio on free voice and cheap data prices led to consolidation in the Indian telecom sector with many small telcos shutting shop under losses and currently only Jio, and Airtel are left along with the merged entity of Vodafone and Idea.

MTNL is listed but has its net worth already eroded. BSNL is unlisted. MTNL operates in Delhi and Mumbai while BSNL operates in rest of India and mostly in the hinterlands.

The PSUs' merger have been discussed many times earlier in the last 10 years but due to HR and listing issues, it never could be taken up. BSNL has an estimated loss of Rs 14,000 crore in 2019 fiscal and MTNL has been in deep losses. BSNL is a 3G mobile player with sporadic 4G services on hotspots and on old 1900/2100 spectrum bands. It has 12 crore mobile subscribers and 11 per cent market share.

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BSNL, MTNL to be merged, Cabinet approves four-way revival plan

The Minister also said MTNL will be merged with BSNL for the revival of state-owned telecom firms. Until the time of the full merger, MTNL will act as a unit of BSNL.

The cabinet has finally approved the revival package of the two sick telecom companies - Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) Wednesday.

"MTNL, BSNL are neither being closed nor divested," said Telecom Minister Ravi Shankar Prasad.

ALSO READ: Days after strike threat from employee unions, BSNL, MTNL promise staff salaries before Diwali

The Minister also said MTNL will be merged with BSNL for the revival of state-owned telecom firms. Until the time of the full merger, MTNL will act as a unit of BSNL. 

The government on Tuesday announced a four-step plan to revive the telcos. Prasad said the government aims to make these two companies more competitive. Hence, it intends to raise Rs 15,000 crore through sovereign bonds.

Assets of BSNL and MTNL worth Rs 38,000 crore will be monetized in four years," he added.

It was also announced that 4G spectrum will be given to both BSNL and MTNL. The government has planned to offer an "attractive" VRS package for the employees of both the companies.

 

"For example, any employee who opts for VRS package and is over the age of 53.5, will be given 125 per cent remuneration of the salary, pension and gratuity until the age of 60," Prasad said.

 

 

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next step privatization

 

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