Lifeline for MTNL: Govt not to shut down the ailing telecom operator

FOLLOWING the statement in Parliament by heavy industries minister Anant Geete that five public sector undertakings (PSUs) which are in the list of 65 sick PSUs would be closed down, panic gripped many employees in MTNL also since the once-crowning jewel of the government is now struggling for survival. There were apprehensions...

that the Centre might sooner or later close the telecom service provider since MTNL and Air India have now been clubbed in the list of 65 sick PSUs. Now, providing relief to tens of millions of employees, telecom minister Ravi Shankar Prasad has said that there is no plan to shut down loss-making telecom company MTNL, and the government is taking various measures to revive it. The five PSUs to be closed down include three HMT units, Geete had said. He, however, did not name the other PSUs which are slated to be shut.

"There is no plan to close down MTNL," Prasad told a news agency.

Air India and MTNL, once market leaders in aviation and mobile telephony sectors, respectively, were declared sick following recurring losses by the sick PSUs. As per the criteria j as per the criteria for a PSU to be declared as such, after they incurred losses worth 50 percent or more of their average net worth during four preceding years. MTNL, which provides telecom services in Delhi and Mumbai, has been losing market share over the last many years. Its market share in wireless has come down to 0.36 percent and wireline to 13.10 percent at the end of January. The government is taking various measures to revive MTNL which includes refund the amount MTNL paid for acquiring broadband wireless spectrum (BWA) in 2010. The government had also approved pension support to MTNL for about 43,000 employees who joined the state-run firm from the department of telecom. MTNL had reported a standalone net loss of Rs. 730.83 crores for the third quarter ended December 31, 2014. 

A central PSU is declared sick if its accumulated loss in a financial year is equal to or more than 50 per cent of its average net worth in the four immediately preceding years, and/or if it can be termed sick by the meaning in the Sick Industrial Companies (Special Provisions) Act, 1985.