Logo of Bharat Sanchar Nigam Ltd (BSNL) painted on a wall outside its office in Kolkata
A woman speaks on her mobile phone in front of the logo of Bharat Sanchar Nigam Ltd (BSNL) painted on a wall outside its office in Kolkata, India, August 24, 2017. Picture taken August 24, 2017.REUTERS/Rupak De Chowdhuri

India plans to merge loss-making state telecom providers Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd, giving employees the option to retire voluntarily, the communications minister said on Wednesday.

The two carriers have struggled to win customers at a time Reliance Industries' telecoms' upstart Jio and rivals Bharti Airtel and Vodafone Idea have rolled out 4G services and cut prices on voice and data.

Airtel vs Reliance Jio
Airtel vs Reliance JioIBTimes India

"Neither BSNL-MTNL is being closed, nor is being disinvested, nor is being hived (off) to any third party," minister Ravi Shankar Prasad told a news conference to announce a plan to resuscitate the two companies.

"We want to make them competitive, bring in professionalism."

MTNL, largely present in major Indian cities such as Delhi and Mumbai, will act as a unit of BSNL until the merger is completed, Prasad said. He didn't provide a date for the merger.

BSNL had 116 million subscribers in August, according to data from India's telecoms regulator.

New Delhi will raise 150 billion Indian rupees ($2.12 billion) via sovereign bonds to strengthen the two state-run carriers, Prasad said, adding that the government will monetise telecoms assets worth 380 billion rupees.