• 16:18 Nov 17, 2019

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BSNL, MTNL merger finally approved by Cabinet

By: Rohan Pal, The Mobile Indian, New Delhi Last updated : October 24, 2019 2:08 pm

The Cabinet has also approved infusion of Rs 15,000 crore via sovereign bonds, a voluntary retirement scheme (VRS) and it has also allocated 4G airwaves.
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The Cabinet on Wednesday has finally approved the merger of two state-owned telcos, Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL). The Cabinet has also approved infusion of Rs 15,000 crore via sovereign bonds, a voluntary retirement scheme (VRS) and it has also allocated 4G airwaves. 

 

The Union Cabinet has also revealed plans for monetising Rs 38,000 crore of assets in the next four years. After the merger, MTNL will act as a subsidiary of BSNL. Furthermore, the Cabinet has also approved the allocation of 4G spectrum on an administrative allocation basis. The whole process will be done at 2016 prices. The Cabinet will also pay Rs 4,000 crore from the budget for the spectrum expense. 

 

“BSNL and MTNL will raise a sovereign bond of ₹15,000 crores for their revival and assets of both the PSUs worth ₹38,000 crores will be monetized. The Cabinet also approved an attractive VRS package for the employees. The government will provide 4G spectrum on an administrative allocation basis. The Cabinet has also given an 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.

 

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This brings a good news both the telecom operators, who are facing acute crises. The BSNL is running with an estimated loss of Rs 13,000 crore in 2018-19, while MTNL is running with an estimated loss of Rs 3,400 crore. BSNL has pan-India operations, except Delhi and Mumbai. The two metro cities are covered by MTNL. Prasad said that the government is confident that the two companies will be operationally profitable over the next two years. He further added that both companies may become fully profitable by 2023. 

 

BSNL and MTNL were once thriving companies, however, both of them failed to keep up with the competition. The entry of Reliance Jio in the telecom space destroyed the two state-owned telecom players. Furthermore, both the companies also failed to keep up with technology changes, which results in a drastic drop in subscribers.

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Tags: BSNL MTNL BSNL MTNL merger BSNL merger MTNL merger operator news

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