MTNL to winding up soon

Life line of two major metro in Delhi and Mumbai ,Mahanagar Telephone Nigam (MTNL) which provides telecom services and brings telecom revolution since 1986 , Now  struggling with declining revenues and mounting losses in the very technology and price competitive market with it's has a huge staff strength of 27,919 which needs to be taken care of by the government is finally exploring the option of shutting down the debt-laden firm by monetise its land, buildings and tower business. Government is also exploring various options on how to give MTNL's licence fees of Rs.11,000cr will come up for renewal in April next year.


Sources said, as far as the firm’s mobile subscribers are concerned, they can easily port out to other operators which has happened of late when some private operators shut down their services. MTNL’s landline business can be assigned to fellow PSU, BSNL which currently does not have presence in Delhi and Mumbai Previously, different governments explored the possibility of merging MTNL and BSNL and creating one single company but it could not fructify because of HR-related issues. It has a total of around 2.5 million sq ft of commercial land and 4 million sq ft of residential assets, spread over the two cities and a large part of these can be monetised either through sale or leasing for commercial purposes.


A look at the company’s financials prove that it is beyond redemption. Its employee cost is at an unsustainable level of close to 100% of its revenues. Its losses are more than its revenue — the company reported a net loss of Rs 2,941 crore in 2016-17 while revenues were at Rs 2,870 crore (see chart). It is meeting annual interest costs of about Rs 1,500 crore by taking more loans. In its annual report for 2016-17, the company acknowledged the danger its handicap and protrayed a bleak outlook by saying:“Because of high leverage and heavy repayment schedule of loans as well as interest payment to banks and financial institutions in the coming years, there is possible risk of liquidity crunch in near future, which will be a great threat to MTNL to keep it as ongoing concern in near future”....Read More

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