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.
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.