MTNL to BSE, NSE: Merger with BSNL, employee costs reduction underway

NEW DELHI: Mahanagar Telephone Nigam Limited (MTNL) Friday informed the Bombay Stock Exchange BSE) and National Stock Exchange (NSE) that it has received a letter from the government on the revival of the ailing telco entailing merger with BSNL, allocation of fourth-generation (4G) airwaves, and sovereign bonds worth Rs 15,000 crore.

MTNL that operates in two metropolitans— Delhi and Mumbai, in a filing to stock exchanges said that it has received a letter dated October 29 on the contours of relief package including in-principle approval for the merger of BSNL and MTNL.

The letter by PSU Affairs director Mandeep Singh, according to the state-run telco, provides details on the BSNL and MTNL revival by reducing employee costs, administrative allotment of spectrum for 4G services, debt restructuring by raising of sovereign guarantee bonds, and monetisation of assets.

The overall revival plan also allows a full merger between the two entities. In the meantime, MTNL, according to the letter, would be made a subsidiary of BSNL by transferring the government shareholding of MTNL to BSNL to derive the synergy in network operations and sales.

“Sovereign guarantee bonds of Rs 15000 crore of tenure of 10 years or more to be raised and serviced by BSNL/MTNL for the purpose of debt restructuring,” the Department of Telecommunications (DoT) official in a letter said.

On October 23, Prime Minister Narendra Modi-headed Cabinet has approved the revival package for the two financially-stressed operators that have a high revenue-to-wage ratio.

The government, as a part of the revival plan, aims to reduce in the employee cost by immediately offering a Voluntary Retirement Scheme (VRS) on a revised Gujarat model to the employees attaining the age 50 years and above.

The monetisation of tower and fiber infrastructure including leasing would be considered after studying the market conditions with the aim to maximize the returns.

The stimulus scheme also aims to monetise Rs 38,000 crore worth of real estate assets of the two companies to service the debt, capital spend and other requirements while the progress, according to the DoT, would be reviewed by a high-level committee under the Principal Advisor to Prime Minister.