The government of India is contemplating the option of handing over the operations of Mahanagar Telephone Nigam Ltd (MTNL) to Bharat Sanchar Nigam Ltd (BSNL) through an agreement, rather than opting for a merger. According to a credible source familiar with the matter, a final decision on this critical move is expected to be made within the next month.
The proposal to transfer the operations of debt-laden MTNL to BSNL through an agreement is currently under active consideration. Given MTNL’s hefty debt burden, a merger with BSNL is not seen as a viable choice, as per the source. Once a decision is reached, the proposal will be presented to the Committee of Secretaries and subsequently to the Cabinet for approval.
MTNL, faced with escalating financial challenges, made a revelation in a recent statutory filing that it lacks the funds necessary to make interest payments to certain bondholders. The corporation cited insufficient funds as the reason for its inability to meet the second semi-annual interest payment due on July 20, 2024, with respect to its bond series. This non-payment was in violation of the provisions of the Tripartite Agreement (TPA) signed among MTNL, the Department of Telecom, and Beacon Trusteeship Ltd.
Furthermore, MTNL\’s subscriber base has been on a declining trend, in sharp contrast to private telecom giants like Reliance Jio and Bharti Airtel that have been expanding their user numbers. From 4.66 million subscribers (wireless and wireline) in January-March 2023, MTNL’s customer base dwindled to 4.1 million a year later. The financial figures for MTNL also paint a bleak picture, with losses ballooning to Rs 3,267.5 crore in FY24 from Rs 2,915.1 crore in FY23. The revenue from operations in the last fiscal year stood at Rs 798.56 crore, marking a significant 14.6% decline from the previous year.
The transfer of MTNL’s operations to BSNL could have substantial implications for the telecom sector in India. Stay tuned to HeadlineFly.com for the latest updates on this crucial development and its potential impact on the Indian business landscape.
