MTNL and BSNL Likely To Be Shut Merged By The Government, Know WHY?

MTNL (Mahanagar Telephone Nigam Limited) is a government telecom operator is operating since 1986. And according to media reports, government intends to shut down the working of the telecom company. Also it is being stated that the purpose is to shift the manpower and operations to BSNL (Bharat Sanchar Nigam Limited) which is another telecom company owned by the Indian government. This is a huge decision of merging two different entities.

Why shut down MTNL

This decision is because the telecom company is constantly running in losses. The debt over the company is only increasing day by day. It is becoming difficult for the government to take care of this “sick unit”.

During the year 2022 to 2023, this telecom operator has accounted for a loss of Rs.2,910 Crore. This loss is even more than previous year’s loss of 2,602 Crores. The expenses of MTNL are increasing day by day. The same accounted for Rs 4,384 for the fiscal year 2023. Not only this, MTNL is also under increasing debt which is just piling over the previous.

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Government supported MTNL and BSNL

In the year 2019 and 2022, government gave two relief packages from to MTNL and BSNL. The package included various measures such as voluntary retirement scheme for the employees of BSNL and MTNL.

Government even provided the the allocation of administrative spectrum for the provision of 4G services through capital infusion, the issuance of sovereign bonds with a tenure of 10 years or more for debt restructuring purposes, and the monetization of land, buildings, towers, and fiber assets to maximize returns. Furthermore, the package included an in-principle approval for the merger of BSNL and MTNL.

Merging these two might prove to be a good decision as both these sick units might come out of their debts and puddle of increasing losses.