The government will transfer its 56.89% shareholding in Mahanagar Telephone Nigam Ltd (MTNL) to Bharat Sanchar Nigam Ltd as a first step to revive the two loss-making companies, the former said in a notice to the BSE on Friday. The merged entity would also raise ₹15,000 crore via sovereign bonds to restructure their debt.

The MTNL communication to the exchange comes after the Union Cabinet’s 23 October decision to hand over the reins of MTNL to BSNL in the hope that a leaner pan-India state-owned telecom service provider would be better placed to take on nimbler private sector rivals in a cut-throat sector.

The Cabinet had approved a package which included a generous voluntary retirement scheme for all staff of the two companies aged 50 and above.

For employees currently more than 55 years of age, on opting for VRS the pension will be commuted only when they attain 60 years (current retirement age). For those currently 55 years old and less, on opting for VRS, the pension will be commuted in the sixth year i.e. 2024-25.

The Department of Telecommunications will allot spectrum to BSNL/MTNL for providing 4G services through capital infusion by the government. The payment of GST on the spectrum cost will be paid through budgetary support.

The combined company will also undertake monetization of non-core assets that could include divestment of land, building, tower and fiber. A committee has been formed to oversee the monetization exercise. It comprises principal advisor to the Prime Minister, cabinet secretary, secretary (department of economic affairs), telecom secretary, disinvestment secretary and housing and urban secretary.