Mahanagar Telephone Nigam Limited (MTNL), a state-run telecom operator in India, recently announced its inability to pay interest dues on bonds. Struggling to grow its business, MTNL is not in a position to meet its bond obligations. However, a report from Business Standard indicates that the government will likely step in to pay the dues on behalf of MTNL. A Department of Telecommunications (DoT) official confirmed that the payment will be made before the due date of July 20.
On July 20, MTNL is required to pay a semi-annual interest of 7.59% on certain bonds. Since MTNL is unable to make this payment, the government will cover the dues before the deadline. According to the Tripartite Agreement (TPA) between DoT, MTNL, and Beacon Trusteeship Ltd, MTNL is supposed to fund the semi-annual interest into an escrow account 10 days before the due date. MTNL has stated that it currently lacks the funds to do so.
MTNL’s financial situation has worsened, with losses increasing from Rs 2,915.1 crore in FY23 to Rs 3,267.5 crore in FY24, while revenue from operations fell by 14.6% to Rs 798.56 crore. Meanwhile, Bharat Sanchar Nigam Limited (BSNL) is set to take over MTNL’s operations in Mumbai and Delhi. BSNL already manages MTNL’s mobile networks in these cities, and it is expected to handle all MTNL operations soon, though there will be no merger.
The government is still considering the future of MTNL, with debt restructuring currently underway. Once completed, BSNL will assume control of MTNL’s operations.
