In a bid to revamp state-owned telecom firms, the Union Cabinet Wednesday approved the merger of Mahanagar Telephone Nigam Limited (MNTL) with Bharat Sanchar Nigam Limited (BSNL).
"MTNL, BSNL are neither being closed nor divested," Union Telecom Minister Ravi Shankar Prasad told reporters in New Delhi.
The Cabinet also approved a revival package of Rs 29,937 crore for the two loss-making telecoms. The revival package includes raising of Rs 15,000 crore sovereign bonds and monetising Rs 38,000 crore of assets in next four years.
To cut down on costs, Ravi Shankar Prasad said, an attractive voluntary retirement scheme would be offered for employees. Until the merger is complete, MTNL will act as a subsidiary of BSNL, Prasad added.
Today's Cabinet announcement comes at a time when MTNL and BSNL have been posting successive loses in recent financial years amid stiff competition from private players.