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To revive MTNL and BSNL, Centre approves their merger

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The Union Cabinet on Wednesday approved the merger of the state-owned telecom firms Mahanagar Telephone Nigam Limited (MTNL) with Bharat Sanchar Nigam Limited (BSNL).

Briefing reporters after the cabinet meeting, Communications and Electronics and Information Technology, Ravi Shankar Prasad, said that a revival plan for BSNL and MTNL has been approved.

“We are going to merge MTNL with BSNL. Since MTNL is a listed company with shares the merger will take time. Till then MTNL will act as a subsidiary of BSNL,” he said.

He also said that the government has no plan to close or disinvest MTNL and BSNL and expressed confidence that BSNL will become profitable in two years.

The telecom minister said the merger is aimed at making the telecom firms “more competitive and bring in professionalism”. The 4G spectrum is also allocated to Telecom PSEs.

The central government’s revival package for the two firms includes raising of Rs 15,000 crore sovereign bonds and monetising Rs 38,000 crore of assets in the next four years. During the process of the merger, MTNL will act as a subsidiary of BSNL.

Prasad said voluntary retirement scheme (VRS) will be offered to employees to cut cost. Both BSNL and MTNL are loss-making companies. While MTNL is largely present in Delhi and Mumbai, BSNL has a wider network.

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