September 22, 2020 | 5:36 AM IST

Govt announces merger of plagued MTNL-BSNL, Rs 70k cr revival package

Centre on Wednesday approved a Rs 70,000 crore revival package for the financial ailing telcos Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL). The revival plan includes merging of the two firms, monetizing their assets and providing Voluntary Retirement Scheme (VRS) benefits to employees. This will enable the combined entity to turn profitable within two years. While BSNL has a headcount of 163,000 MTNL has a workforce of 22,000 people.
The news was announced by Telecom Minister Ravi Shankar Prasad in New Delhi. He said that none of the two telecom companies is being shut, disinvested nor hived off by the third party, but this step is an attempt to make the two professionals.
The minister said, “The MTNL will act as a subsidiary of BSNL. Also, the VRS packages will come up which is voluntary and not a forced one.
He also informed that in the two years, the BSNL will become EBITDA (earnings before interest, tax, depreciation, and amortisation) positive, and the Group of Ministers will then decided the future course of action.

The package approved includes s infusion of Rs 20,140 crore capital for the purchase of 4G spectrum, Rs 3,674 crore for GST on spectrum allocation, companies raising Rs 15,000 crore in debt on the sovereign guarantee and government funding Rs 29,937 crore for VRS and another Rs 12,768 crore towards retirement liability.
Meanwhile, the BSNL credited September's salary on Wednesday with most of it being funded from internal accruals. The salary expenses amount to about Rs 750-850 crore.

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