Synopsis : MTNL has defaulted on loans worth ?8,585 crore to seven public sector banks, intensifying concerns over its financial health amid mounting sector challenges. The debt-laden PSU is now leaning on asset monetisation plans under NLMC to reduce debt and fund operations.
State-run telecom company Mahanagar Telephone Nigam Ltd (MTNL) has defaulted on loan repayments worth ?8,585 crore to seven public sector banks, according to a recent stock exchange filing. The default includes overdue interest of ?790.59 crore and unpaid principal of ?1,868.61 crore, adding to the government’s financial stress amid ongoing challenges in reviving public-sector telecom entities.
MTNL’s total financial liabilities, covering both short-term and long-term borrowings, currently stand at ?34,484 crore. For FY24, the company reported a net loss of ?3,302 crore, with an operating income of just ?728.47 crore. MTNL’s financial report acknowledged heavy accumulated losses, substantial erosion of net worth, and excess current liabilities over current assets.
The telecom PSU’s ongoing financial struggles come at a time when Vodafone Idea, in which the government holds a 49% stake, posted a massive loss of ?27,442 crore for FY25. The back-to-back losses highlight the broader crisis in India’s public-sector telecom space, which faces cutthroat competition and high capital expenditure requirements.
Meanwhile, the government’s earlier plan to merge MTNL with Bharat Sanchar Nigam Ltd (BSNL) has been put on hold due to complexities, including MTNL’s heavy debt burden. Instead, BSNL has been managing MTNL’s operations under a 10-year service agreement in Delhi and Mumbai, with the arrangement allowing for renewal or termination with mutual consent. BSNL has already taken over the operation and maintenance of MTNL’s mobile services since 2021 in both cities.
In an effort to improve its financial position, MTNL has resumed asset monetisation under the National Land Monetization Corporation (NLMC). The company has submitted four properties valued at over ?100 crore each for monetisation and is working to monetise smaller properties with approvals from its board and the Group of Ministers overseeing the revival of MTNL and BSNL. Transaction advisors have also been appointed for the monetisation of seven properties valued under ?10 crore.
Additionally, MTNL has signed an MoU with BSNL to share infrastructure and network assets, while renting out its properties in Delhi and Mumbai to generate revenue and reduce debt. These efforts align with the Cabinet-approved revival plan, aiming to stabilise MTNL’s financial condition and sustain its operations amid intense market competition.
Shares of MTNL fell 4.22% to ?49.92 on the BSE, reflecting investor concerns over the company’s financial stability despite the ongoing monetisation efforts. With government stakeholding at 56.25%, MTNL’s turnaround will be critical for the future of India’s public telecom ecosystem.
Disclaimer : This article is for informational purposes only and does not constitute financial or investment advice. Please consult with a qualified advisor before making investment decisions.
