The merger would resultantly help the two companies to "provide better quality services to customers on a pan-India basis.
The PSUs had set December 3 as last date for employees to opt for VRS.
We want to revive them and make them professional, said Communications minister Ravi Shankar Prasad.
The government has approved a plum Rs 69,000-crore revival package for BSNL and MTNL.
The numbers of VRS optees have been steadily rising since the plan was announced earlier this week.
A three-judge bench, headed by Justice Arun Mishra, upheld the definition of adjusted gross revenue formulated by the Department of Telecom.
MTNL's scrip jumped 4.92 per cent to Rs 6.19 -- its upper circuit limit on the BSE.
The move comes at a time when Bharat Sanchar Nigam Ltd (BSNL) is facing mounting pressure on its financials.
BSNL as well as MTNL had delayed payment of salaries for February until mid-March due to a financial crisis.
Around 8,000 employees of MTNL staged protest demanding the immediate release of the salary.