The Union Cabinet on Wednesday approved the merger of two ailing state-owned telecom companies - Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL). The Cabinet, headed by Prime Minister Narendra Modi, also announced revival plan for the both the telcos. Briefingreporters on decisions, Telecom Minister Ravi Shankar Prasad said the government would put in Rs 29,937 crore for revival of the two state-owned telecom companies and their assets worth Rs 38,000 crore would be monetised.

The Cabinet also gave its nod to allocate 4G spectrum toPublic Sector Enterprises. He said the government also planned to raise asovereign bond of Rs 15,000 crore for their revival. Additionally, thegovernment will offer a voluntary retirement scheme to the employees of thesecompanies to cut cost, said Prasad. In a statement, the office of Ravi ShankarPrasad tweeted the merger would be "operationalise gradually". MTNLwill be become a subsidiary of BSNL till the merger is completed. "BSNLand MTNL are strategic assets of India. They cater to the needs of peopleduring disaster. They provide important communication services togovernment," it stated.

The statement said the Modi government had offered a"very generous financial assistance to revival BSNL and MTNL". Prasadhas urged the employees of both these PSUs to work hard and help the governmentin making these organisations profitable. Both the companies have a collectivedebt of Rs 40,000 crore.