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MTNL confirms real estate asset sale to cut debt

Loss making state owned telecom provider MTNL has confirmed that it is “considering” lease/sale of real estate, buildings, towers, cables ducts, etc. to reduce its debt, in a reply to stock exchanges. It will use the of the proceeds of sale for cutting debt. It has also sent in an application to the DoT for approval. The development was first reported by Financial Express; the publication claimed that MTNL was planning to raise Rs 4000 crore.

These plans come at a time when the telco has been reporting continuous losses: it reported a loss of Rs 634.8 crore in Q4FY17, down from 819.96 crore in Q3. MTNL has not provided data on how much its debts stack up to, but indicated this on its balance sheet: MTNL’s total current liabilities stood at Rs 10,580.75 crore in FY17 as compared to Rs 4,933.36 crore in form of total current assets. Current liabilities indicate outstanding debt owed to third parties that need to be paid within the current fiscal year.

MTNL plans to install 3G sites when competitors are already on 4G

This isn’t first time that MTNL considered selling assets to save its decelerating business. In February, the Ministry of Communications informed the Lok Sabha that MTNL is “exploring the monetization of its assets which may contribute to its revenue”. It was also looking to create a “managed service model (in partnership) with BSNL for its mobile network.” The telco is also in process of expanding its GSM/3G network in Delhi circle and plans to install 1800 new 3G sites, which will help handle additional mobile traffic. It is also upgrading its 3G network in Mumbai to HSPA+, which is just an enhanced version of the 3G standard.

However, this might not work, mainly because MTNL’s cellular services are live in Delhi and Mumbai only. It must expand to new markets for adding new users, but MTNL has to look beyond 3G. Its biggest competitors including Airtel, Idea, Vodafone (soon to merge with Idea) have unveiled multiple unlimited calling packs bundled with 4G data to take on Jio’s freebies. While these operators are also increasingly focusing on offering high-speed data to consumers including 4G (wireless) and fiber (wired). In fact, RCOM is also mulling sale of its DTH business to save its telecom business, which is debt ridden.

MTNL will need to either expand its network to new circles or at least look at launching 4G in its existing circles to keep up with the competition



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