Merger a likely solution for cash-strapped MTNL, BSNL

New Delhi: The Department of Telecommunications (DoT) is "working on" a proposal for merger of cash-strapped BSNL and MTNL as part of efforts to revive the ailing state-owned telecom firms, a source said.

The source, privy to the development, said merger is "one of the many components" of the overall revival plan being worked out for the two corporations, and that a final call on the matter will be taken by the Cabinet.

The move assumes significance as the distressed telecom PSUs Mahanagar Telephone Nigam Ltd (MTNL) and Bharat Sanchar Nigam Ltd (BSNL) have been making losses and have faced challenges in clearing staff salaries in the recent past.

"Merger is one of the many components of the overall revival plan because clearly MTNL cannot stand by itself.

Finally, the Cabinet has to take a view on that," the source said adding that the plan entails MTNL being merged with BSNL.

MTNL provides telephony services in Delhi and Mumbai, while BSNL is present in the rest of the circles.

The DoT is preparing a rescue plan for MTNL and BSNL in the form of a revival package that entails components like voluntary retirement scheme, asset monetisation, and allocation of 4G spectrum.