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.
In an official communication sent to the exchanges on Friday, 1 November, MTNL informed that the government will transfer its 56.89 percent shareholding in the telecom company to BSNL.
The move comes as the first step after the Centre, in October, approved the revival plan for the two loss-making companies.
The Cabinet had approved a package which included a voluntary retirement scheme (VRS) for all staff of the two companies aged 50 and above.
MTNL’s letter to BSE informs that there is in-principle approval for merger of the two companies as per relevant rules.
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 letter also mentions that sovereign guarantee bonds of Rs 15,000 crore of tenure of 10 years or more are to be raised and serviced by BSNL/MTNL for the purpose of debt restructuring.
BSNL and MTNL both have cumulative debt of Rs 40,000 crore.
(At The Quint, we question everything. Play an active role in shaping our journalism by becoming a member today.)