Center Thinks Of Just Giving BSNL Control Over MTNL Operations To Prevent Merger

New Delhi: Rather than going through with a merger, the government is thinking about giving Mahanagar Telephone Nigam Ltd. (MTNL) to BSNL through an agreement, according to a source with knowledge of the issue.
In a month, a decision on this will probably be made in the end.

The source informed Press Trust of India that consideration is being given to the possibility of transferring MTNL's operations, which are heavily indebted, to Bharat Sanchar Nigam Ltd (BSNL) through an agreement. The source stated that a merger with BSNL was not a desirable option due to MTNL's substantial debt.

Following a decision, the proposal would be presented to the Cabinet after being heard by the Committee of Secretaries.

This week, MTNL disclosed in a statutory statement that it is unable to pay interest to specific bondholders "due to insufficient funds" amid growing financial difficulties.

"On July 20, 2024, the second semi-annual interest for MTNL's 7.59 percent bond series is due. It stated that MTNL is required to deposit the semi-annual interest into the Escrow account with a sufficient amount ten days before to the due date, in accordance with the structured payment system of the Tripartite Agreement (TPA) signed by MTNL, the Department of Telecom, and Beacon Trusteeship Ltd.

The company stated in the BSE filing that, in light of the TPA's requirements, it is advised that MTNL was unable to adequately replenish the Escrow account due to a lack of finances.

BSNL oversees all operations in India, with the exception of Delhi and Mumbai, whereas MTNL provides services in those two cities.

With the increasing demand for data and voice services among Indians, private telecom companies such as Reliance Jio and Bharti Airtel have been adding more subscribers in recent months. Meanwhile, MTNL's customer base has been declining, falling from 4.66 million (wireless and wireline) in January-March 2023 to 4.1 million a year later.