STATE-RUN MTNL will be a subsidiary of BSNL by transferring the Government’s shareholding to it following the Union Cabinet’s in-principle approval to their merger. Government holds 56.25 per cent in MTNL. Its share price was up after a long time. Its share was up 4.55 per cent at Rs 8.05. MTNL on Friday said that it has received a letter from the Government detailing the revival plan of the company as an indication of formal communication to begin the resurrection exercise.
In October, the Cabinet had approved merger of loss-making and incipient telecom firms BSNL and MTNL as part of a revival package which includes raising sovereign bonds, monetising assets and voluntary retirement scheme (VRS) for employees. The letter informs that there is in-principle approval for merger of BSNL and MTNL as per relevant rules/guidelines of GoI.
Meanwhile, MTNL is to be made subsidiary of BSNL by transferring the Government shareholding of MTNL to BSNL to derive the synergy in network operations and sales till the merger is completed. The Union Cabinet in its meeting held in October considered and approved the proposals of DoT for “Revival of BSNL and MTNL”. The Cabinet, had approved a VRS package for the ailing PSUs by Reduction in the employee cost by immediately offering VRS on Gujarat Model to the employees of age 50 years and above.
The ex-gratia amount is limited so that total of ex-gratia amount (as per Gujarat Model) and admissible pension for the remaining period of service does not exceed 125 per cent of the salary that the employee would have drawn on the date of voluntary retirement in the remaining period of the service.