Government Looking Into Handing Over MTNL Operations To BSNL Via Agreement: Report

The report noted that the authorities are looking into handing over MTNL to BSNL via an agreement as the high debt of the former makes merger a less preferable option

The customer base of MTNL has been declining from 4.66 million in the January-March 2023 period to 4.1 million in the same period a year later. (Image Source: X/@MTNLMbiOfficial)

Source : X

The government is looking into handing over operations of the Mahanagar Telephone Nigam Ltd (MTNL) to BSNL via an agreement, media reports said.

The report by PTI cited sources in the know that the authorities are intending to join the operations via an agreement instead of going down the route of a merger. The final decision regarding the same will be taken in the span of a month, the source said.

The report noted that the authorities are looking into handing over MTNL to BSNL via an agreement as the high debt of the former makes merger a less preferable option. The source stated that the proposal for the agreement would be submitted before the Committee of Secretaries after the decision is finalised and eventually taken to the Cabinet. 

Notably, in the week amidst increasing financial troubles, MTNL issued an official filing and informed that it remained unable to make interest payments to some bondholders due to a lack of funds.

The filing stated that 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’.

MTNL provides services in Delhi and Mumbai, while BSNL operates across the country except Delhi and Mumbai. The customer base of MTNL has been declining from 4.66 million in the January-March 2023 period to 4.1 million in the same period a year later. The users include both wireless and wireline customers. The losses of the operator soared to Rs 3,267.5 crore in the 2023-24 fiscal year (FY24) from Rs 2,914.1 crore in the preceding 2022-23 fiscal year (FY23)