If India ever privatizes telecom firms, it could lead to increased competition, improved efficiency, and better services due to private sector investment and innovation. However, it might also raise concerns about job security for employees, reduced rural connectivity, and potential market monopolization.
However, as per sources, India has no plans to privatize telecom companies Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), Deputy Communications Minister Pemmasani Chandra Sekhar stated in response to a parliamentary question on Wednesday.
He further mentioned that last month, the central government approved an additional capital expenditure of Rs. 6,982 crore (approximately $800 million) for BSNL. Additionally, in February, CNBC TV18 reported that the government had sanctioned Rs. 6,000 crore for the 4G network expansion of both BSNL and MTNL.
Mahanagar Telephone Nigam Limited (MTNL)
During Tuesday’s trading session, the shares of this state-owned telecommunications company moved down by nearly 2.8 percent to hit an intraday low at Rs. 39.9 on BSE, with a market cap of Rs. 2,552.8 crores. Moreover, MTNL has been making headlines for quite some time due to its ongoing financial struggles, which have resulted in multiple debt defaults in recent years.
In November 2024, the company defaulted on a Rs. 1,000 crore loan from Bank of India, compelling the lender to make a Rs. 200 crore provision in its financials for Q2 FY25. MTNL has been struggling with financial difficulties, reporting a loss of Rs. 3,303 crore in FY24 due to declining revenues.
As of August 2024, MTNL’s total financial debt stood at Rs. 31,944.5 crore. The company defaulted on payments totalling Rs. 5,726.3 crores, comprising a principal amount of Rs. 5,492 crores and interest of Rs. 234.2 crores. Major lenders affected include Union Bank of India (Rs. 3,480.8 crore), Bank of India (Rs. 1,039.7 crore), and Punjab National Bank (Rs. 447.6 crore).
In early February 2025, the Indian government approved a plan to raise ~Rs. 16,000 crore through the sale of assets owned by MTNL and Bharat Sanchar Nigam Limited (BSNL). This strategic move aims to address the mounting debt burdens of these state-run telecom companies.
MTNL reported a decline in revenue from operations, experiencing a fall of nearly 11.5 percent YoY to Rs. 170 crores in Q3 FY25, while the net loss stood at Rs. 836 crores in Q3 FY25, compared to a net loss of Rs. 839 crore in the same quarter the previous year. MTNL is engaged in the business of providing telecom services in the geographical areas of Mumbai and Delhi.
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Bharat Sanchar Nigam Limited (BSNL)
BSNL is a public sector undertaking (PSU) owned by the Government of India, with an authorized share capital of Rs. 1.5 lakh crores and paid-up capital of Rs. 38,886.44 crores comprising Rs. 31,386.44 crores. This includes Rs. 31,386.44 crore in equity and Rs. 7,500 crore in preference share capital. Notably, BSNL is not a publicly listed company.
The company was established on September 15, 2000, following the corporatization of the former Department of Telecom Services. BSNL reported a marginal growth in revenue from operations, experiencing a rise of nearly 9.3 percent YoY to Rs. 4,973 crores in Q3 FY25, as against Rs. 4,548.7 crores in Q3 FY24. During the same period, the PAT improved from a loss of Rs. 1,568.6 crores to a profit of Rs. 264.2 crores.
Written by Shivani Singh
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