MTNL’s Mounting Debt Raises Investor Concerns As Losses Widen
MTNL’s financial challenges include Rs 8,000 crore in bank loans from lenders such as SBI, Punjab National Bank, and others. Rising costs and shrinking revenues have worsened its debt burden.
MTNL is grappling with a significant debt burden of Rs 32,000 crore, including Rs 8,000 crore in bank loans from lenders such as SBI, Punjab National Bank, Union Bank of India, Bank of India, Punjab & Sind Bank, and UCO Bank. The telecom operator has already defaulted on loan repayments totalling Rs 1,600 crore.
The company’s financial strain is exacerbated by increasing wage and finance costs, alongside declining revenues. Employee costs historically accounted for 75-80% of MTNL’s revenues. To address this, MTNL implemented a Voluntary Retirement Scheme, which reduced its headcount by 91% during the financial year ending March 2024, compared to a decade-ago period.
Operational Losses And Government Plans
MTNL continues to face losses as higher expenses and shrinking revenues impact its operations. The government has announced plans to transfer the company’s business to BSNL and monetise its assets. Telecom Minister Jyotiraditya Scindia has assured that MTNL’s debt is backed by a sovereign guarantee, minimising risks to creditors.
Share Price Decline And Retail Exposure
MTNL’s share price has declined by nearly 50% since its peak in July 2024. Retail investors’ shareholding in the company increased to 27.24% in September 2024 from 25.35% in December 2023, exposing more individual investors to the company’s financial risks.
Revival Efforts And Pending Decisions
Proposed measures to revive MTNL included merging it with BSNL and expanding its services beyond Delhi and Mumbai. However, the execution of these plans has been delayed. Market participants are also awaiting clarity on whether MTNL’s stock will be moved to the trade-to-trade segment—where shares can only be traded on a delivery basis to curb speculative trading and volatility.
