Govt Plans to Transfer MTNL Operations to BSNL: Merger Unlikely

Govt Plans to Transfer MTNL Operations to BSNL

Govt Plans to Transfer MTNL Operations to BSNL: The government has introduced a major update that it plans to Transfer Mahanagar Telephone Nigam Ltd (MTNL) Operations to BSNL as per the development.

An agreement will be passed through which the government will hand over all the operations of MTNL to Bharat Sanchar Nigam Ltd (BSNL).

Sources say that Mahanagar Telephone Nigam Ltd (MTNL) is in a lot of debt so merging with Bharat Sanchar Nigam Ltd (BSNL) is not a good idea than transferring all its operations.

Furthermore, as other telecom companies such as Jio, Airtel, and Vodafone are emerging and taking over most of the customers, old companies like MTNL are struggling to survive.

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Mahanagar Telephone Nigam Ltd (MTNL) especially operates in Mumbai and Delhi is struggling financially and even low customer rates.

However, the decision to transfer MTNL to BSNL will still take one month time to finalize. The proposal will now be brought in front of the Committee of Secretaries and then to the Cabinet for approval.

This decision's main motive is to make things easier and avoid the problems that come with a full merger.

News18 reported that in a statutory filing, MTNL reported to its shareholders that it wouldn’t be able to pay interest payments to them.

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The statutory filing said quoted by News18, “The second semi annual interest with regard to 7.59 per cent MTNL’s bond series…is due on July 20, 2024. As per the structured payment mechanism of Tripartite agreement (TPA) signed among MTNL, Department of Telecom and Beacon Trusteeship Ltd, MTNL has to fund the semi-annual interest into the Escrow account with adequate amount 10 days before the due date.”

According to the terms of the TPA, the company said in a BSE report that it could not fund the Escrow account with enough money because of insufficient funds.

MTNL has experienced huge losses in the past few years, reports says that it lost around Rs 3,303 crore in the FY24 and Rs 2,915 in the fiscal year 2022-23. The company revenue is down by 15 percent from Rs 798 crore earnings a year ago.

The reports stated that the telecom company is also in debt of Rs 25,795 crore which is an increase of 2,295 crore debt from last year. The subscribers were also down to 4.1 million users in the first quarter of FY25 from 4.66 million users last year.

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