The recent proposal will likely be taken up by the Committee of Secretaries (CoS) after which it will likely be put up for Cabinet approval, highly-placed sources instructed TOI.
The proposal to hand over the operations of publicly-listed MTNL — that provides companies in Delhi and Mumbai — to BSNL will assist the latter provide pan-India operations as it really works on a revival plan.
“By not merging the two companies, there is no need to de-list MTNL from the bourses. In case of a merger, MTNL would have to be de-listed and a condition would have arisen to buy back certain number of shares. This can now be avoided as it will be a simple handing over of operations,” one of many sources stated.
MTNL’s poor efficiency, nonetheless, has not resulted in any opposed affect on the corporate’s shares. Despite incurring heavy losses and having witnessed decline in its subscriber base, the share worth of MTNL has gone up 139% over the previous one yr on the BSE, closing the day at Rs 46.3 in opposition to Rs 19.4 on July 12 in 2014.
Also, even because the broader telecom business witnessed large progress over the previous decade, MTNL has not been ready to acquire from this surge and has reasonably misplaced market share and grip on enterprise (mirroring the decline additionally seen by BSNL). The share of MTNL’s wireline enterprise (together with broadband) has come down to 6% on the finish of the April this yr in opposition to 12.5% in April 2014. On the opposite hand, within the cellular enterprise, the corporate’s share has gone down to almost 0.2% in opposition to just under 0.4% a decade again.
The transfer to hand over each day operations to BSNL is probably going to have an effect on the scrip of MTNL as the corporate will solely have land and buildings as its property.
The supply stated that the division of telecom (DoT) desires to hasten the mixing between the 2 corporations as each have been scuffling with no sight of a reputable revival. For the yr ended March 31, 2024, MTNL reported widening of losses to Rs 3,303 crore from Rs 2,911 crore a yr in the past.
The annual income from operations declined by 15% to Rs 728 crore within the monetary yr 2023-24 from Rs 862 crore in FY23. The excellent debt of MTNL on the finish of FY24 elevated to Rs 25,795 crore from Rs 23,500 crore a yr in the past. The excellent debt on the corporate excludes quick time period borrowings and non-convertible debentures price Rs 3,569 crore for which the legal responsibility to pay curiosity and principal is on govt.
