Govt to infuse Rs.29,937 crore
The Cabinet has approved the proposal for revival of Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) by infusing Rs.29,937 crore.
The cabinet has also given in-principle approval for the merger of the Public Sector Units.
Telecom Minister Ravi Shankar Prasad said a sovereign bond of Rs.15,000 crore will be raised by the Centre for the revival of MTNL and BSNL.
Prasad’s office also posted a tweet saying the merger would be “operationalise gradually”.
The revival will see administrative allotment of spectrum for 4G services, debt restructuring by raising of bonds with sovereign guarantee, reducing employee costs and monetization of assets
The approved was announced on 23 Oct 2019:
Administrative allotment of spectrum for 4G services to BSNL and MTNL so as to enable these PSUs to provide broadband and other data services.
The said Spectrum will be funded by the Government by capital infusion in these PSUs at a value of Rs.20,140 crore in addition; the GST amount of Rs.3,674 crore to this spectrum value will also be borne by the Government through Budgetary resources.
By using this spectrum allotment, BSNL and MTNL will be able to deliver 4G services, compete in the market and provide high speed data using their vast network including in rural areas.
BSNL and MTNL will also raise long-term bonds of Rs.15,000 crore for which sovereign guarantee will be provided by the Government.
With the said resources, BSNL and MTNL will restructure their existing debt and also partly meet CAPEX, OPEX and other requirements.
BSNL and MTNL will also offer Voluntary Retirement to their employees, aged 50 years and above through attractive Voluntary Retirement Scheme (VRS), the cost of which will be borne by the Government through budgetary support.
The ex-gratia component of VRS will require Rs.17,169 crore in addition, said the Cabinet, adding that the Government will be meeting the cost towards Pension, Gratuity and Commutation. Details of the scheme will be finalised by BSNL/MTNL.
BSNL and MTNL will monetise their assets so as to raise resources for retiring debt, servicing of bonds, network upgradation, expansion and meeting the operational fund requirements.
It is expected that with the implementation of said revival plan, BSNL and MTNL will be able to provide reliable and quality services through its robust telecommunication network throughout the country including rural and remote areas.
BSNL and MTNL has just about 10.22% combined share of the wireless subscriber market as of 31 August 2019, while private telecom companies dominated with 89.78%, according to TRAI data. fiinews.com
