Govt to Transfer MTNL Operations to BSNL Instead of Merging

The government is considering transferring the operations of the public sector telecom operator Mahanagar Telephone Nigam Limited (MTNL) to the larger Bharat Sanchar Nigam Limited (BSNL) instead of merging the two companies, according to a report by the Times of India, which cited unidentified sources.

MTNL Reason for the Operational Transfer:

Both MTNL and BSNL have faced significant financial difficulties in the past, requiring government bailouts, including as recently as two years ago.

The decision to hand over operations rather than pursue a merger is primarily due to the complexities involved in a merger. A merger would necessitate de-listing MTNL, which implies the government would need to buy back a certain number of shares.

MTNL’s financial performance has deteriorated over the past year. The company reported an increased loss of ₹3,303 crore for the financial year 2023-24, up from ₹2,911 crore the previous year. Revenue also declined by 15%, dropping to ₹728 crore from ₹862 crore.

Rising Debts and Financial Obligations:

MTNL’s debt burden has grown, reaching ₹25,795 crore from ₹23,500 crore a year earlier. This week, MTNL announced in a regulatory filing its inability to make interest payments to certain bondholders due to insufficient funds.

While private telecom operators like Reliance Jio and Bharti Airtel have seen their subscriber bases grow, MTNL’s customer base has fallen from approximately 4.66 million users in January-March 2023 to 4.1 million users this year. MTNL provides services exclusively in Delhi and Mumbai, whereas BSNL offers pan-India services, excluding Delhi and Mumbai.

The final decision on this matter is expected to be made within a month’s time, according to the PTI report.

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