Merger of BSNL and MTNL

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.