NEW DELHI: The central government is likely to shut down public sector firm Mahanagar Telephone Nigam Ltd (MTNL) with Bharat Sanchar Nigam Ltd (BSNL), taking a major departure from its proposed merger, Mint reported citing officials.
“Almost decided. MTNL to shut down; BSNL will take over the operations. BSNL is already operating in Delhi and Mumbai,” an unnamed official said in the report.
MTNL posted a loss of Rs 2,910 crore in FY23, compared to a loss of Rs 2,602 crore in FY2222. Income from operations declined to Rs 861 crore from Rs 1,069 crore in FY2222, while expenditure rose to Rs 4,384 crore from Rs 4,299 crore in the same period. MTNL’s outstanding debt rose to Rs 23,500 crore in 2023 from Rs 19,661 crore in 2022.
MTNL’s board has recently approved the issuance of sovereign bonds worth Rs 6,661 crore for FY23-24 as per Cabinet approval in connection with MTNL’s revival.
“… The Board recommended enabling resolution for issuance of guaranteed, unsecured, rated, listed, redeemable, non-convertible and taxable bonds in the nature of debentures (NCD) of Rs 6,661 crore in FY 2023. 24 with a tenure of 10 years or more,” the telco said.
Last July, the Union Cabinet approved a four-year relief package of Rs 1.64 lakh crore to revive BSNL, which includes MTNL.
Under the package, the government will provide a sovereign guarantee to these PSUs to raise long-term loans. The telco is likely to issue bonds maturing in 10 years, with a semi-annual coupon similar to the price of central government bonds, according to merchant banking sources.
According to an official statement while announcing the revival package last year, to reduce the BSNL balance sheet, the government will have to take up debt structures that provide sovereign guarantees to these PSUs (BSNL and MTNL) to raise long-term loans. 40,399 crore long-term bonds can be raised. This will help restructure existing debt and reduce pressure on balance sheets.