The Central government is planning to shut down the telecom operator Mahanagar Telephone Nigam Ltd (MTNL). According to the report of Mint, individuals familiar with the matter have stated that the intention is to transfer MTNL's workforce and operations to Bharat Sanchar Nigam Ltd (BSNL).
This is a drastic shift from the previous plan of the government to merge the two entities.
The recent decision has come in the wake of amidst mounting debt and persistent losses faced by MTNL. The official further disclosed that MTNL's closure is imminent, with BSNL poised to assume control over its operations, Mint reported.
During the fiscal year 2022-23, MTNL recorded a loss of Rs 2,910 crore, indicating a rise from the previous fiscal year's loss of Rs 2,602 crore. The company's revenue from operations experienced a decline from Rs 1,069 crore in FY22 to Rs 861 crore in FY23, while expenses increased to Rs 4,384 crore from Rs 4,299 crore during the same period, as outlined in the report. Additionally, MTNL's outstanding debt escalated to Rs 23,500 crore in FY23 from Rs 19,661 crore in FY22.
During the fiscal year 2022-23, BSNL witnessed a rise in revenues to nearly Rs 20,700 crore, surpassing the previous fiscal year's Rs 19,052 crore. However, the company's losses expanded to Rs 8,161 crore compared to Rs 6,981 crore previously. The growth in revenue can be attributed to an increased number of fibre-to-the-home (FTTH) connections, augmented business from leased line services, and additional operating income. Notably, the FTTH business experienced remarkable growth of 30 per cent year-on-year, surpassing the carrier's wireless business, which contributed less than a third of the overall revenues and grew by only 7 per cent to Rs 5,638 crore for FY23.
In 2019 and then in 2022, BSNL and MTNL have received two relief packages from the government.
In 2019, the government sanctioned a package worth ₹69,000 crore. The package encompassed various measures, including a voluntary retirement scheme for employees of BSNL and MTNL, the allocation of administrative spectrum for the provision of 4G services through capital infusion, the issuance of sovereign bonds with a tenure of 10 years or more for debt restructuring purposes, and the monetization of land, buildings, towers, and fiber assets to maximize returns. Furthermore, the package included an in-principle approval for the merger of BSNL and MTNL.
In a previous announcement regarding the revival package, an official statement indicated that de-stressing the financial burden on BSNL's balance sheet, debt restructuring measures should be undertaken. As part of this initiative, the government will provide sovereign guarantee to BSNL and MTNL, enabling them to secure long-term loans. Through the issuance of long-term bonds, the two public sector undertakings (PSUs) would have the capacity to raise an amount of Rs 40,399 crore. This strategic move will help to restructure their existing debt and de-stress the financial strain on their balance sheets.
