New Delhi: The government is thinking about handing over the operations of Mahanagar Telephone Nigam Ltd (MTNL) to Bharat Sanchar Nigam Ltd (BSNL) through an agreement, instead of merging the two companies, according to a source familiar with the matter. A final decision is expected within a month.
Debt Issues Hindering Merger
The source mentioned that due to MTNL’s high debt, a merger with BSNL is not seen as a good option. Instead, transferring MTNL’s operations to BSNL through an agreement is being considered.
Approval Process
Once a decision is made, the proposal will be reviewed by the Committee of Secretaries before being presented to the Cabinet.
Financial Troubles
MTNL, facing financial difficulties, recently informed in a legal filing that it cannot pay interest to certain bondholders because of a lack of funds. The company stated that it cannot pay the semi-annual interest due on its bonds on July 20, 2024. This is due to insufficient funds in the Escrow account as required by the Tripartite Agreement (TPA) signed by MTNL, the Department of Telecom, and Beacon Trusteeship Ltd.
Operational Areas
MTNL operates in Delhi and Mumbai, while BSNL provides services across India except for these two cities. While private companies like Reliance Jio and Bharti Airtel have grown their customer base by offering data and voice services, MTNL’s customer numbers have dropped from 4.66 million in early 2023 to 4.1 million a year later.
Financial Performance
MTNL’s losses increased to Rs 3,267.5 crore in FY24 from Rs 2,915.1 crore in FY23. The company’s revenue from operations was Rs 798.56 crore in the last fiscal year, down 14.6% from the previous year.
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