Indian government to rescue BSNL and MTNL

A bailout package of almost Rs 74,000 crores is being planned.

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It is reported that a bailout plan costing Rs 73,787 crores by the Government of India will help Bharat Sanchar Nigam (BSNL) as well as Mahanagar Telephone Nigam (MTNL) to regain normalcy in terms of their financial situation.

According to the Department of Telecommunications (DoT), it would be cheaper to bail out the two entities instead of shutting them down, which would entail a bigger amount of Rs 1.2 lakh crore.

The steadily falling performance of BSNL has been attributed to the low tariffs owing to stiff competition in the mobile space, high cost of maintaining staff and lack of 4G services.

The Govt feels that early retirement plans, which are a part of the bailout package, will help BSNL and MTNL to a great extent. The retirement age will be brought down from 60 to 58 and will help reduce the expenditure on maintaining staff. An attractive voluntary retirement scheme (VRS) will be offered along with five per cent compensation. While reducing the retirement age will cost about Rs 10,993 crores, the VRS package may entail a cost of about Rs 29,182 crores.

Plans are afoot to provide funds to allot 4G to both BSNL as well as MTNL. This will mean an expenditure of at least Rs 20,410 crores. Combined with the Capex cost, the total comes to Rs 73,787 crores.

Even though this seems like a huge cost, with the allocation of 4G to BSNL, the Company will be able to attract more subscribers with its revived plans and broadband services, and stand up to competition.

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