Telecom ministry okays merger of MTNL with BSNL
30 July 2019
Loss-making telecom operators Mahanagar Telephone Nigam Ltd (MTNL) and Bharat Sanchar Nigam Ltd (BSNL) are likely to be merged as part of a revival plan approved by the telecom ministry, the Hindu Business Line reported.
The report said that MTNL, which operates only in Mumbai and Delhi circles, would be converted into a subsidiary of BSNL following the merger, adding that the merger would be carried out after sorting out issues such as human resources.
Telecom minister Ravi Shankar Prasad is reported to have okayed the revival plan for the two telecom PSUs.
Once the issues concerning the two telecom PSUs are sorted out, a joint committee will be put in place to oversee the process over the next 18 months, according to a memo approved by telecom minister Ravi Shankar Prasad.
The plan, after approval by the telecom minister, has been circulated among other ministries for comments before a final decision to be taken by the cabinet.
The proposed revival plan includes a Rs14,155-crore capital infusion for both 4G spectrum acquisition and working capital expenses of BSNL, besides plans for land monetisation to meet the company’s expansion plans.
The land monetisation will be monitored by a special purpose vehicle (SPV) jointly created by BSNL, Department of Telecommunications (DoT) and Department of Investment and Public Asset Management (DIPAM), says the report.
The land parcel for monetisation would be transferred to the SPV, which would be backed by a loan of Rs23,000 crore to BSNL.
BSNL is also working on a voluntary retirement scheme (VRS) for employees above 50 years. Under the VRS, an ex-gratia will be paid to the employees in cash, in single or maximum five installments for tax benefits. Subsequently, BSNL will slash the retirement age to 58, in order to further reduce the workforce.
BSNL intends to issue bonds to general public to raise funds for its proposed VRS. These bonds will be “guaranteed” by the government, with a 50 per cent interest liability on bonds to be borne by the Government.
Both MTNL and BSNL don’t have 4G spectrum, though the latter is providing 4G services using new Base Transceiver Stations (BTS) in certain circles. The service is provided using 3G spectrum, but BSNL needs 4G spectrum to provide both 3G and 4G services simultaneously in an area covered by a single BTS.
BSNL had sought 4G spectrum in 2017, but is yet to be awarded.
Simultaneoulsy, BSNL chairman PK Purwar said the telecom company has set sales targets for the company's various business verticals - fixed line, enterprise businesses, Fibre-to-Home and consumer mobility or wireless - to be achieved by the various circles in the current fiscal.
The move is aimed at checking the build-up of operational losses.
Under the new sales plan, each circle has been asked to ensure at least Rs1,000 crore rent income from the unutilised spaces.
BSNL's consumer mobility (CM) vertical has been given a target to achieve two million gross connections every month alongwith a 10 per cent increase in visitor location register (VLR) figures by focusing on sales channels.
VLR is database that contains information of subscribers in a specific location.
Currently going through its worst financial crisis, BSNL defaulted in paying salaries for the first time in February this year and has been on a continuous decline path despite addition of subscribers.