MTNL to submit roadmap for revival by August; may partner with BSNL

STATE-run telecom firm MTNL will submit its revival plan to the Department of Telecommunications (DoT) by August this year which aims to turn the loss making PSU profitable. “We are in advanced stages of finalising the report on the revival plan for MTNL and will submit it to the DoT by August,” MTNL CMD PK Purwar told news agency PTI.

On the revival plan, the CMD said it includes...

suggestions for expansion of service network, ways to increase the Navratna PSU’s market share as well as cost optimisation measures.

Earlier this month, Purwar was given back the additional charge of chairman and managing director of Mahanagar Telephone Nigam Ltd after Narendra Kumar Yadav relinquished the top post on completion of his tenure.

Purwar, the director (finance) of MTNL, had earlier held the additional charge between June 2014 and June 2015.

MTNL that offers telecom services in Delhi and Mumbai circles expects to post operational profit at the end of the current financial year and turn profitable in 2017-18.

At the end of March 2016, the PSU had 356,085 wireless subscribers and 3,504,088 wireline users, as per Telecom Regulatory Authority of India (TRAI) data.

As per the proposed plan, MTNL will partner with BSNL to provide equipment for its mobile services in Delhi and Mumbai circles as managed service provider on revenue sharing basis.

The plan also includes expanding basic or fixed services network in partnership with private players on a revenue share basis.

Besides, MTNL is also targeting revenue of Rs 1,000 crore in two years from asset monetization as it looks to turn profitable in this fiscal ending March 2017. The asset monetisation includes Rs 750 crore from optic fibre and Rs 50 crore from tower business.

MTNL posts net profit of Rs 174.58 crore for Jan-March quarter. Last fiscal, MTNL's standalone net loss narrowed to Rs 2,005.74 crore, from Rs 2,893.39 crore a year-ago.

Till 2008-09, MTNL had been a profit making PSU and contributed around Rs 43,023 crore to government in form of tax/fee/dividend till 2014-15.

However, the scene changed after 2009-10 and there has been a continuous reduction in its revenue as against almost fixed operating cost, which has affected its profitability.

The PSU has been unable to invest in expansion of its networks due to financial distress.

Earlier, the government provided financial assistance to both for refund of surrendered broadband wireless access (BWA) spectrum. Under this head, Rs 4,533.97 crore has been refunded to MTNL through bonds.

MTNL was given broadband and 3G spectrum for which it paid Rs 11,000 crore in 2010 that has impacted its balance sheet.

MTNL posted a net loss of Rs 704.93 crore in third quarter ended December 31, 2015 while its total income during the quarter stood at about Rs 770 crore.

Earlier, the government provided a refund of Rs 492.26 crore to MTNL on account of liability arising out of levy of Minimum Alternate Tax (MAT) towards its financial support.

According to an IIM-Bengaluru report MTNL will not be in a position to continue the business beyond one or two years without government support. The report has examined five options for MTNL's revival: raising equity from the market, merger with BSNL, sale of mobile division along with licence and all related assets, surrendering 2G and 3G spectrum to government and the strategic sale by way of transferring 51 per cent or more stakes to a private entity. The report has recommended two options — surrender of spectrum and taking service of MTNL in Digital India, in order of preference that government can consider.