The Indian government has reportedly made a INR920 million (US$11,006,235.72) payment towards the bond dues of the struggling state-owned operator MTNL. Another INR640 million (US$7,657,535.01) payment is likely to follow from the government to help with MTNL’s interest obligations that are due in August.
As the Economic Times news service notes, the debt-laden MTNL had said last week that it was unable to make interest payments to certain bondholders due to lack of funds.
MTNL is of course a small player in the market, mainly offering services in Delhi and Mumbai, and seeing a steady erosion in its subscriber base over recent years alongside vast losses – including a barely believable INR32.7 billion (US$391million) for the 2024 financial year – and declining revenue.
What is a little puzzling is what the government plans to do with MTNL in the longer term. As recently as 10 July the Economic Times reported that MTNL was nearing the end of its independent existence with the government close to finalising a INR300 billion (about US$3.6 billion) debt restructuring, after which the entire operations were to be transferred to the much bigger state-owned operator BSNL, though whether that would have involved officially closing MTNL was not entirely clear.
The question of whether the 3,000 or so staff of MTNL should be offered a voluntary retirement scheme or transferred to BSNL was apparently also under consideration at the time.
Original plans to merge the two state-run companies seem to have been put on hold, not least due to the high debt levels of MTNL. Both groups have financial issues to deal with, but BSNL, it seems, is seen as more viable, a view possibly confirmed by MTNL’s latest woes.
