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Government may shut down MTNL: Is there an alternative?

MTNL

Government-run telecom operator MTNL might be among five sick public sector undertakings (PSUs) the government plans to shut down, reports the Press Trust of India. Heavy industries minister Anant Geete said during Question Hour in the Lok Sabha, adding that their employees were being offered a “very good” VRS package.

Other PSUs which are on the block are three units of HMT which made watches and tractors. MTNL, once a leader in the mobile telephony sector, was declared sick  after they incurred losses worth 50% or more of their average net worth during four preceding years.

MTNL has reported another loss of Rs 730.83 crore at the end of December quarter, however it was down 12.4% from Rs 834.22 crore loss in the previous quarter. The same quarter last year however, MTNL reported a profit of Rs 428.03 crores, on account of writing off BWA spectrum payment worth Rs 1,404.9 crore.Revenues from Cellular services declined further this quarter to Rs 180.87 crores, down 2.5% from 185.53 crores in the previous quarter and down 5% from Rs 190.53 crores in the corresponding quarter last year.

MTNL has also submitted a revival plan to the department of telecommunications, as indicated by this Business Standard report.

Our take

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Shutting down a state-run PSU such as MTNL which has valuable telecom infrastructure may not be the best idea. The government should rather consider unbundling the company and be able to lease out its infrastructure to other telecom operators.

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