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BSNL and MTNL to be merged; Cabinet approves revival plan with a sovereign guarantee worth Rs 15,000 crore

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The Union Cabinet, headed by Prime Minister Narendra Modi on Wednesday approved the proposal to revive Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) through administrative allotment of spectrum for 4G services along with merger of two state-owned telecom companies.

During a press brief, Telecom Minister Ravi Shankar Prasad announced that Rs 29,937 crore would be put into reviving both the telecom companies as well as monetisation of the assets worth Rs 38,000 crore of both companies.

The Cabinet gave its approval for administrative allotment of 4G spectrum to Public Sector Enterprises to be able to provide broadband and data services.

As per a government statement, the said Spectrum will be funded by the Government of India by capital infusion in these PSUs at a value of Rs 20,140 crore in addition. The GST amount of Rs 3,674 crore for this spectrum value will also be borne by the Government of India through Budgetary resources.

This spectrum allotment will enable BSNL and MTNL to deliver 4G services and provide high speed data in rural areas. Also, BSNL and MTNL will raise long term bonds worth Rs 15,000 crore for which Government of India will provide sovereign guarantee.

Both the telecom companies will offer voluntary retirement to their employees aged 50 years and above through a Voluntary Retirement Scheme (VRS). The cost for this scheme will be borne by the Government of India through a budgetary support. An additional sum of Rs 17,169 crore will be required for the ex-gratia component of VRS towards meeting the cost of Pension, Commutation and Gratuity.

“Post the implementation of this 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,” read the government statement.

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