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MTNL losses narrowed to Rs 639 Cr in Q3FY18; net worth completely eroded

Government-owned telecom operator MTNL continues to post losses. It reported losses of Rs 639.01 crore for the quarter ended December 31, 2017 (Q3FY18). Losses declined from Rs 703.17 crore in the preceding quarter, and also on a year-on-year (YoY) basis losses significantly declined from Rs 819.96 crore in the corresponding quarter last year.

Total income recovered and stood at Rs 852.64 crore, up 7.8% quarter-on-quarter (QoQ) from Rs 791.10 crore in Q2FY18. There was a marginal improvement from a total income of Rs 836.43 crore in Q3FY17. On the other hand, operating income followed a downward curve. It stood at Rs 580.12 crore for the quarter, down 9.7% from Rs 642.23 crore in the preceding quarter, and down 16% from Rs 690.59 crore in the same quarter last year.

Segment Revenues

Basic (Fixed line and Broadband) revenue stood at Rs 519.69 crore, a decline of 5.43% QoQ from Rs 549.54 crore in Q2FY18. In Q3FY17, this segment had posted revenue of Rs 568.88 crore. The segment posted losses of Rs 150.98 crore for the quarter, however, it’s worth noting that losses were almost half of the Rs 288.40 crore losses posted in the preceding quarter, and less than half of the Rs 382.30 crore losses posted in the corresponding quarter last year.

Cellular segment revenue stood at Rs 61.73 crore, down 34.41% from Rs 94.12 core in the previous quarter, and less than half of the Rs 123.45 core revenue posted in Q3FY17. The losses posted by the segment widened in this quarter. Losses for the quarter stood at Rs 168.60 crore, as compared to losses of Rs 117.40 crore in the preceding quarter, and losses of Rs 142.78 crore in the same quarter last year.

MTNL net worth completely eroded

The auditors’ report mentions that MTNL’s net worth has been completely eroded, and that the company’s net cash loss during “the current quarter and period ended December 31, 2017, as well as in the previous year and the current liabilities exceeded the current assets substantially.” The report also mentions that the Department of Public Enterprises (DPE) has classified MTNL as ‘Incipient Sick CPSE,’ which has also been confirmed by the Department of Telecommunications.

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Back in October 2015, DPE had issued guidelines regarding how to deal with the revival and restructuring of incipient sick Central Public Sector Enterprises (CPE).

Government’s indecision on MTNL

It’s worth noting hat the government had earlier considered merging BSNL and MTNL in Lok Sabha in March last year to save the company from a possible shutdown. But later in a Lok Sabha reply in August 2017, Minister of Communications Manoj Sinha said that “there is no proposal for merger of BSNL and MTNL”.

Earlier, in February 2017, the Ministry of Communications had informed the Lok Sabha that MTNL is exploring options to monetize its assets which may contribute to additional revenue.

Download: Financials

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