Merger of BSNL and MTNL

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News:Union Cabinet has approved the revival plan of Bharat Sanchar Nigam limited(BSNL) and Mahanagar Telephone Nigam limited(MTNL) and in-principle merger of the two.

Facts:

Why this revival plan:

  • BSNL and MTNL are government owned telecommunications company. 
  • MTNL provides telephony services in Delhi and Mumbai, while BSNL is present in the rest of the circles in the country.
  • The revival package was needed as the two PSUs comes are facing financial stress due to stiff competition and reduction in tariffs.
  • The competition in the mobile segment, high employee costs and absence of 4G services has also progressively eroded the competitive strength of BSNL and MTNL.

About the revival plan:The revival plan includes:

  • Merger of BSNL and MTNL
  • administrative allotment of spectrum for 4G services,
  • debt restructuring by raising of bonds with sovereign guarantee extended by the Centre 
  • reducing employee costs through a voluntary retirement scheme (VRS) 
  • monetisation of assets.