Government considering closing MTNL and moving its operations to BSNL: Report

The Mahanagar Telephone Nigam Ltd. (MTNL) closure and subsequent transfer of its operations and personnel to Bharat Sanchar Nigam Ltd. (BSNL) are being considered by the Indian government. According to a Livemint article, this choice signifies the rejection of an earlier scheme to merge the two state-run telecom firms. The decision was made as MTNL battles pressing financial issues, such as rising indebtedness and ongoing losses.

The significant debt load on MTNL's books is the main issue motivating this choice. Government representatives express scepticism over the viability of revitalising MTNL and think that combining it with BSNL might cause that company to experience more financial difficulties, impeding the possibilities for both firms' resuscitation.

According to the article, the government is also considering delisting MTNL from stock exchanges but does not have any intentions to float BSNL, the fourth-largest telecommunications company in India.

The idea of shutting down MTNL is reportedly being seriously studied because to its continued losses and the burden of about Rs 40,000 crore in debt, according to two government sources acquainted with the situation who were quoted in the story. According to the article, one of the officials who requested anonymity said, "It's virtually decided. The operations of MTNL would be taken over by BSNL if it is shut down. BSNL has already started operating in Mumbai and Delhi."

MTNL has had trouble improving its situation despite assistance from the government. For the fourth quarter and the entire year ending March 31, 2023, Mahanagar Telephone Nigam Limited announced financial results and the telco posted sales for the fourth quarter at INR 2,191.8 million, down from INR 2,385.9 million in the previous quarter. Revenue decreased from INR 5,198.8 million to INR 4,181.4 million. In comparison to a year earlier, the net loss increased to INR 7,485.5 million. In continuing operations, the basic loss per share was INR 11.88 as opposed to INR 9.53 in the prior year. In comparison to INR 9.53 a year ago, the diluted loss per share from continuing operations was INR 11.88. The basic loss per share increased from INR 9.53 to INR 11.88. Sales for the entire year decreased from INR 11,490.4 million to INR 9,352.3 million. Revenue decreased from INR 17,779.2 million to INR 15,483.2 million. In comparison to a year earlier, the net loss increased to INR 29,151.1 million.

While, the financial situation of BSNL, has seen modest improvements in recent years. BSNL is on pace for recovery thanks to government support of Rs 1.64 trillion in 2021 and a recent purchase order for 4G equipment for Rs 15,000 crore. According to one insider, the telecom operator is planning to introduce 5G services by 2024 and has already paid off Rs 7,000 crore in bank loans.

Financially speaking, BSNL had a strong fiscal year 2022–2023 with revenues rising to around Rs 20,700 crore and losses rising to Rs 8,161 crore. Increased fiber-to-the-home connections, more expensive leased line services, and other operating income were the main factors in the revenue increases. BSNL Bharat Fiber FTTH business revenue increased by 30% and represented a third of total revenue.

The government's rescue packages for BSNL and MTNL in 2019 and 2022 were designed to help the telecom companies deal with their financial difficulties.