State-owned telco MTNL has received a compensation amount of Rs 428.95 crore from the government in return for surrendering 800 Mhz of CDMA spectrum, after MTNL originally proposed Rs 458.04 as compensation, the company said in a notification to BSE. A separate ET report in early March stated that MTNL had surrendered 5 Mhz of CDMA spectrum that was put up for auction in Delhi and Mumbai, and that it planned to invest around Rs 649.03 crore to revive its business.
Last year in March, MTNL was among the five public sector undertakings (PSUs) the government planned to shut down, heavy industries minister Anant Geete had said during Question Hour in the Lok Sabha. However, union minister for communications and information technology Ravi Shankar Prasad later clarified saying the government did not plan to shut down the loss-making operator, and would instead take various measures to revive it. Following which reports of an MTNL and BSNL merger surfaced in September last year, but the deal never happened to go through.
Last year, we had pointed out that shutting down a state-run telco, which has valuable telecom infrastructure, may not be a great idea; rather leasing or un-bundling the company’s infrastructure might help other telecom operators.
MTNL on a loss-making streak
The sate run telco has been in a continuous streak of losses since Q1 FY15; the latest financials for the quarter ended December 31st, 2015 (Q3 FY16) shows that MTNL suffered a Rs 704.93 crore loss, while net loss in the same quarter last year was Rs 730.83.
In addition, total operational revenue for MTNL dipped 5.77% to Rs 766.98 crore in Q3FY16, from Rs 813.92 crore in the same quarter last year
Basic services: Revenues from basic services like fixed line and broadband dominated MTNL’s revenues (79.3%), with the segment reporting revenues of Rs 612.29 crore for Q3FY16—down 4.2% from Rs 639.2 crore in the same quarter last year, and down 2.86% from Rs 630.35 crore in the last sequential quarter.
Cellular Services: Revenues from Cellular services accounted for just 20.95% of total revenue; it declined to Rs 160.65 crore for the same quarter(Q3FY16)—down 11.18% from Rs 180.87 crore in the same quarter last year.
A TRAI report revealed that MTNL added around 62,970 active mobile connections between December 2015 to January 2016, taking its total active mobile connection base to 2,161,875. Note that overall there were 917,597,038 active mobile connection by then end of January 2016, among 12 different mobile operators in India