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Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) have signed a memorandum of understanding (MoU) to optimize operations. While both the government-run entities, they operate differently and in different cities. It is worth noting that BSNL already took over the responsibility of handling the mobile network services of MTNL in Mumbai and Delhi. According to an exchange filing from MTNL, the signed MoU is to bring synergy to the operations of both companies.

BSNL, MTNL Sign MoU to Optimize Operations

Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) are the two government-run telecom companies in India. Both companies have different management and a completely different target market. For instance, MTNL only focuses on the Delhi and Mumbai metro circles while BSNL works PAN-India. A few years back, there were talks around the merger of both state-run telecom companies to streamline operations. But then there were no updates and the merger was seemingly put to the side by the government. However, the merger of both companies could be very much in the books.

BSNL and MTNL Merger Seems to be Back on the Books

Loss-making state-owned telecom firm MTNL Ltd on Thursday (November 14) reported a net loss of ₹890.3 crore for the second quarter that ended September 30, 2023. The company recorded a net loss of ₹ 773.5 crore in the April-June quarter. In the second quarter, total revenue stood at ₹174.2 crore during the period under review, down 5.3% against ₹183.9 crore in the corresponding period. At the operating level, EBITDA loss stood at ₹119.3 crore in the second quarter of this fiscal over a loss of ₹110.9 crore in the preceding June quarter. EBITDA is earnings before interest, tax, depreciation, and amortisation.

MTNL Q2 Results | State-owned telecom company reports net loss of ₹890 crore

There are ongoing delays by MTNL in servicing its debt obligations for bank loan facilities which are not covered under guaranteed debt by GoI. The total default amount (interest plus principal) stands at ₹1383.34 crore as on November 30, 2024. Delay is primarily due to paucity of funds considering insufficient cash generation from operations and delay in timely support from GoI to address existing poor liquidity position.


MTNL has a large employee base, and staff costs absorb a high percentage of the company’s revenue. MTNL’s staff cost was ~₹570 crore in FY24, which is ~78% of its revenue from operations in FY24 . Although there has been a significant decrease in employee costs post the successful implementation of VRS, it continues to remain over 5x the industry average. Overstaffing is a major risk faced by the company and this cost in case of other operators is ~5%-7% of the total operating income (TOI). This is due to legacy issues, which are likely to remain going forward. 

The issuer has made timely interest payments.

P. K. Purwar, Chairman and MD

MTNL is one of the two state-owned telecom service providers in India, alongside Bharat Sanchar Nigam Limited. GoI holds a majority stake in MTNL (56.25% as on March 31, 2024), and the balance is held by the public. The company enjoys a ‘Navratna Status’ that gives greater autonomy to central public sector enterprises (CPSEs) in their investment and capital expenditure (capex) decisions. Such a status also aims at facilitating expansion of its operations in domestic and global markets

The company’s debt instruments are backed by unconditional and irrevocable guarantee for the servicing of the entire issue (principal amount and accrued interest), throughout tenure of instruments from GoI through DoT, MoC. Trustee-administered SPM is in place to ensure timely payment of interest and principal obligations of bond/NCD issues through a tripartite agreement between MTNL, trustee, and GoI, through DoT, MoC

Security Name: 8.00% Mahanagar Telephone Nigam Limited 15 Nov 2032

ISIN:

INE153A08105

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Mahanagar Telephone Nigam Limited

Recent News

BSNL, MTNL Sign MoU to Optimize Operations

BSNL and MTNL Merger Seems to be Back on the Books

MTNL Q2 Results | State-owned telecom company reports net loss of ₹890 crore

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