MTNL locked at upper circuit after merger announcement with BSNL

Minister for Communications and IT Ravi Shankar Prasad said the government is neither closing down nor divesting its stake in the two financially stressed entities.

Mumbai: Shares of government-owned Mahanagar Telephone Nigam Ltd (MTNL) on Thursday surged by 4.92 per cent to Rs 6.19 apiece on the BSE after the Union Cabinet a day earlier approved its merger with Bharat Sanchar Nigam Ltd (BSNL).

"The Union Cabinet approves the proposal for revival of BSNL and MTNL by administrative allotment of spectrum for 4G services, debt restructuring by raising of bonds with a sovereign guarantee, reducing employee costs, monetisation of assets and in-principle approval of the merger of BSNL and MTNL," the government said in a statement.

Briefing media persons after the decision, Minister for Communications, Electronics and Information Technology Ravi Shankar Prasad said the government is neither closing down nor divesting its stake in the two financially stressed entities.

BSNL and MTNL will monetise their assets so as to raise resources for retiring debt, servicing of bonds, network upgradation, expansion and meeting the operational fund requirements.BSNL and MTNL will also raise long-term bonds of Rs 15,000 crore for which sovereign guarantee will be provided by the government.

With these resources, both entities BSNL and MTNL will restructure their existing debt and also partly meet capital expenditure, operational expenditure and other requirements."It is expected that with the implementation of the revival plan, BSNL and MTNL will be able to provide reliable and quality services through its robust telecommunication network throughout the country including rural and remote areas," the government said.