According to a Mint report the Central government is planning to shut down the telecom operator Mahanagar Telephone Nigam Ltd (MTNL).
Shift in plans
It will instead transfer MTNL’s workforce and operations to Bharat Sanchar Nigam Ltd (BSNL).
This is a major change from previous plans to merge the two entities.
The latest development has come in the wake of mounting debt and persistent loss making by MTNL.
During the fiscal year 2022-23, MTNL recorded a loss of Rs 2,910 crore, higher than the previous fiscal year’s loss of Rs 2,602 crore.
Revenue from operations experienced a decline from Rs 1,069 crore in FY22 to Rs 861 crore in FY23.
Expenses increased to Rs 4,384 crore from Rs 4,299 crore during the same period.
MTNL’s outstanding debt escalated to Rs 23,500 crore in FY23 from Rs 19,661 crore in FY22.
BSNL’s comparative performance
On the other hand, BSNL witnessed a rise in revenues to nearly Rs 20,700 crore, surpassing the previous fiscal year’s Rs 19,052 crore.
Its growth in revenue can be credited to an increased number of fibre-to-the-home (FTTH) connections, augmented business from leased line services, and additional operating income.
The telco’s FTTH business saw significant 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.
Relief package inclusions
The government helped BSNL and MTNL out in 2019 and then in 2022 with two relief packages.
It sanctioned a package worth ₹69,000 crore in 2019 which included measures such as:
- Voluntary retirement scheme for employees of both companies
- Allocation of administrative spectrum for the provision of 4G services through capital infusion
- Issuance of sovereign bonds with a tenure of 10 years or more for debt restructuring purposes
- Monetization of land, buildings, towers, and fiber assets to maximize returns
- In-principle approval for the merger of BSNL and MTNL
Sources disclosed that MTNL’s closure is imminent, with BSNL poised to assume control over its operations.