Indian press reports are suggesting that state-owned operator Mahanagar Telephone Nigam Ltd (MTNL) may be shut down in the face of continuing losses and mounting debt.
The story, first run in business publication Mint, suggests that as well as shutting down MTNL, government may relocate its staff and operations to another state-run operator, Bharat Sanchar Nigam Ltd (BSNL). This would apparently end plans for a BSNL-MTNL merger.
MTNL's debt – one estimate puts it at ₹40,000 crore (US$4.8 billion) — is massive. In the event of a merger it would probably undermine BSNL, hence the possibility of closure. MTNL has already had problems with debt payments, notably an interest payment to Union Bank of India last year.
BSNL, a much bigger and more diverse concern, looks in slightly better shape thanks to government aid, and a big 4G equipment purchase order, not to mention its own rollout of 4G and, in the longer term, 5G services. BSNL has also enjoyed revenue growth from fibre-to-the-home (FTTH) connections and leased lines, among other services.
While the government has not confirmed plans to shut MTNL down, it's not entirely clear where earnings could come from for the company, which outsourced the maintenance and running of its wireless networks in Delhi and Mumbai to BSNL in 2021 to improve service quality. In fact, Delhi and Mumbai are its main service areas, though its subscriber numbers in these cities are not vast; its monopoly in service provision ceased in 1992.
As regular readers will know, the high debt of MTNL was one of the financial reasons cited as contributing to the deferred merger of MTNL with BSNL last year.
