As a first step, MTNL would be made a subsidiary of BSNL by a likely transfer of the government’s holding in MTNL to BSNL
Key revival package constituents – (1) administrative allotment of LTE spectrum to BSNL and MTNL; the government to infuse Rs200 bn capital to fund the purchase. The money, anyway, comes back to the exchequer in the form of spectrum sale proceeds and there is no fiscal impact per se, (2) VRS package for all employees above 50 years of age; we note that BSNL employs 160,000+ employees while MTNL employs 22,000+; total cost of Rs300 bn would be borne by the exchequer; this would be fiscal hit but will likely be spread over a couple of years as the companies finalize the details and roll out the scheme, (3) sovereign guarantee to Rs150 bn fresh bonds to be issued by BSNL and MTNL, (4) asset monetization of Rs380 bn by the two telecom PSUs over the next four years; these would primarily be surplus real estate assets, in our view, but could include sale and leaseback of tower and fiber assets as well, and (5) merger of MTNL into BSNL; this would take some time given that MTNL is a listed entity.
