The government on Wednesday approved a Rs 68,751 crore revival package for the crisis-ridden state-run telecom firms MTNL and BSNL. This includes an allocation worth Rs 29,937 crore towards the voluntary retirement scheme (VRS) for the employees of BSNL.

According to the VRS scheme, about 36% of BSNL’s 1.76 lakh employees are likely to opt for it. As per the eligibility criteria for VRS defined by the telecom behemoth an employee should be in the age bracket of 50 to 60 years. Accordingly, about 61% of BSNL’s ageing workforce is eligible for the scheme.

In Karnataka alone, where BSNL employs approximately 12,000 people, an estimated 7,786 employees (about 65%) are eligible to opt for the VRS. However, according to multiple sources in the BSNL, about 39% of the company’s workforce is likely to opt VRS scheme in Karnataka circle.

The chairman of BSNL P K Purwar has convened a meeting of all the union leaders in New Delhi on Thursday to discuss the modalities of VRS package. The exact details of the VRS package will be known only after the discussion, a member of BSNL employees union told DH.

The allocation package is more than double the Rs 13,000 crore layout projected by the expert committee earlier this year. The expert committee and the board, along with VRS had also suggested a reduction in the retirement age – a move that the government didn’t go ahead with after widespread criticism.

"The VRS package approved by the cabinet will give eligible employees 125% of the income that they would have earned by serving the company until the age of 60 years. The VRS is voluntary and the government will not force them to take", Telecom Minister Ravi Shankar Prasad said while announcing the cabinet decision.

The revival package also includes raising of Rs 15,000 crore sovereign bonds to meet the immediate capital requirement of both the companies, allocation of 4G spectrum worth Rs 20,140 crore and waiving of GST around Rs 3,674 crore on the allocation of spectrum. The government also plans to raise around Rs 38,000 crore by monetising assets of the two companies by sale and leasing of its properties.

"Neither BSNL nor MTNL is being closed, nor is being disinvested, nor is being hived (off) to any third party. We want to make them competitive, bring in professionalism," the Minister said.

Both BSNL and MTNL, which have a combined debt of Rs 40,000 crore, struggled to win customers as Reliance Industries' telecoms arm Jio and rivals Bharti Airtel and Vodafone Idea have rolled out 4G services and cut prices on voice calls and data.

The Minister did not give a timeline for the merger but said MTNL will function as a subsidiary of BSNL until the merger was completed.

According to Prasad, at present, of the total revenue of BSNL and MTNL, 70% expenditure goes to employees' salaries and other administrative costs while in private players it is less than 5% of their total revenue.