In an attempt to redeem the state-run telecom companies Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL), the government has announced that the cabinet has given its nod to merge both companies. Telecom Minister, Ravi Shankar Prasad confirmed that MTNL will be a subsidiary of BSNL till all required approvals and procedures for the merger are completed.
In an attempt to redeem the state-run telecom companies Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL), the government has announced that the cabinet has given its nod to merge both companies. Telecom Minister, Ravi Shankar Prasad confirmed that MTNL will be a subsidiary of BSNL till all required approvals and procedures for the merger are completed.
While BSNL has a national presence, MTNL operates only in Maharashtra and Delhi. The government believes the firms will turn profitable in two years with the revival package they announced, will help BSNL turn EBITDA positive (EBITDA stands for earnings before interest, tax, depreciation and amortisation). The Telecom Minister also elaborated on the revival package that has been put together in a cabinet briefing, on Wednesday
Minister Ravi Shankar Prasad said that the government has no plans of shutting down or cutting off investment to BSNL or MTNL, as they are important strategic assets of India. He also added that to turn state-run telecom companies competitive and professional, Rs. 15,000 crore will be raised through sovereign bonds, which will be serviced by BSNL and MTNL.
Further it was announced that the 4G spectrum will be allocated to BSNL and MTNL at the 2016 price. In addition, the Ministry also announced that assets worth Rs. 38,000 crore will be monetised in the next four years. Officers who opt to voluntary retirement over 53.5 years of age will be given 125% remuneration of the salary, pension and gratuity till the age of 60, the Ministry said.
The Minister also proposed to cut down on human resources to make the sector profitable. He said human resource cost is as high 70% when compared to other telcoms which stand at 5%. BSNL has Rs 1.76 lakh employees which costs Rs. 850 crore every month towards salaries.
Minister, Ravi Shankar Prasad concluded saying that the 4000 crores which will be needed for 4G Spectrum will be adjusted in the budget.