Ignore political interests: L&T

■ 4G spectrum, sovereign bonds, selling assets, VRS in the offing

Mumbai: The government should overlook political expediencies, instead prioritise its spending to meet the needs of a struggling economy, engineering major Larsen & Toubro said on Wednesday. The government is delaying payments, leading to pressure on working capital, the management of the engineering major said, adding it cannot afford such a situation.

Aiming to revive its two loss making telecom arms, Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), the government on Wednesday decided to merge the two ailing firms as part of a `68,751crore revival package which includes 4G spectrum allocation, raising sovereign bonds, monetising assets and voluntary retirement scheme (VRS) for employees.

Till the completion of the merger process, MTNL will operate as a subsidiary of BSNL, telecom minister Ravi Shankar Prasad said while addressing a press conference on Wednesday.

Sharing details of the revival package, he said that it includes raising

`15,000 crore sovereign bonds to meet the immediate capital requirement of both the companies, 4G spectrum allocation worth

`20,140 crore, `29,937 crore for VRS covering 50 per cent of their employees, and `3,674 crore for goods and services tax that will be levied on allocation of radiowaves.

“In case of BSNL and MTNL, the government’s view is clear. These are strategic assets of India. The entire army network is maintained by BSNL. The VRS package approved by the Cabinet will give eligible employees 125 per cent of income that they would have earned by serving the company till the age of 60 years. With this decision, we have taken care of the interests of lakhs of employees of these PSUs,” he said.

BSNL has around 1.68 lakh employees and MTNL around 22,000.

“The VRS is voluntary and nobody can be forced to opt for it,” he said.

The total debt of both the companies stood at `40,000 crore. Both the companies have been demanding spectrum to start 4G services to remain competitive in the market.

Telecom secretary Anshu Prakash said the spectrum will be allocated to both the companies administratively within a month. “The spectrum allocation to BSNL worth

`14,115 crore will be in lieu of equity shares and about `6,295 crore for MTNL in lieu of preferential shares,” he added.

The government will monetise MTNL and BSNL’s assets worth

`37,500 crore over a period of three years. “The assets primarily include land assets but also rental and leasing of their buildings. MTNL has around 29 retail outlets in Delhi alone,” Mr Prakash said.

“The debt on BSNL is the lowest. They can raise capital expenditure required for rolling out network from the banks and bringing in efficiency in their operations,” he said.