Government Plans To Transfer MTNL Operations To BSNL Amid Financial Struggles, Avoiding Merger: Report

With the rising competition among the India's giant private telecom players day by day such as Reliance Jio, Bharti Airtel and Vodafone-Idea, the state run MTNL finding itself at a crossroads.

The MTNL, primarily operating in Delhi and Mumbai, finds itself in a struggling field financially, with recent reports emphasising its mounting debts and declining customers.

Having grappled with repeated financial challenges and bailout interventions, the government is now contemplating a significant shift for MTNL.

According to sources cited by the Times of India, the proposal to hand over MTNL's operations to BSNL, rather than merging the two entities together, is gaining traction. This fresh approach, is set to be reviewed by the Committee of Secretaries (CoS) before seeking Cabinet approval, aims to streamline operations and avoid the complexities associated with a full merger.

Financial Struggles and Debt Burden

MTNL's financial woes have deepened, as per the Times of India report, with its reported loss of Rs 3,303 crore in the fiscal year 2023-24, up from Rs 2,911 crore the previous year.

The revenue of the company has also have taken a U-turn, declining by 15 per cent to Rs 728 crore, added the report.

The company's debt load has surged to Rs 25,795 crore, an increase from Rs 23,500 crore just a year ago.

Subscriber Decline in a Competitive Telecom Race

In contrast to the rapid and competitive growth seen by its private giants players in the counterparts, MTNL has seen its subscriber base dwindle.

From approximately 4.66 million users in early 2023, the company's customer count has dropped to 4.1 million by the first quarter of this year.

As per the report, the instead of pursuing a merger with BSNL, the authorities are leaning towards transferring MTNL's operations to its larger sibling.

Shares performance

The shares of MTNL on Friday at 3:30 pm IST closed at Rs 46.30, up by 9.43 per cent.