State-owned telecommunications service provider, Mahanagar Telephone Nigam, has been facing a financial crisis for some time now and has been declared ‘incipient sick’, as per the department of public enterprises guidelines.
It is with the help of the Department of Telecommunications (DoT) that MTNL was able to pay the November salaries of its employees. It is now again seeking aid to pay the December salaries.
MTNL had earlier sought help from BSNL to clear wage-related dues amounting to Rs 100 crore. DoT will be giving Rs 55 crore to MTNL for certain telephony services provided in the past and has directed BSNL to also speed up the payment of Rs 100 crore to MTNL for past roaming charges, leased circuit, interconnection, rentals, and so on.
These dues, which had accumulated over the last several years had not even been calculated, but DoT will be clearing them soon. This will help MTNL pay December wages of Rs 160 crore. DoT had earlier given MTNL Rs 120 crore to clear the November salary bill.
A DoT panel will be discussing revival options for MTNL soon. Among the plans being considered are sale of real-estate and giving over a thousand towers to a separate company. However, this will only be possible after DoT transfers the real estates to MTNL, which is a long and time-consuming process.
A large amount of ‘legacy staff cost’ has been the main reason for MTNL being declared ‘incipient sick’, as per the department of public enterprises guidelines.
In addition, MTNL has not been able to keep up with the intense competition, and has been unable to invest in upgrading its network. With all private telecom operators offering 4G services, MTNL’s revenue from operations has fallen drastically.
MTNL suffered a loss of Rs 859 crore in the second quarter, with the total revenue dropping by 21 per cent to Rs 621.26 crore. Employee cost was responsible for 92.2 per cent of total income and 29 per cent more than revenue from operations (Rs 572.83 crore). MTNL’s annual loss has been stagnant at Rs 2,970 crore in FY17 and FY18.