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MTNL losses widened to Rs 943 Cr in Q1FY19

Government-owned telecom operator MTNL continues to post losses. For the quarter ended June 30, 2018 (Q1FY19), it reported losses of Rs 943.38 crore. Losses widened by 4.7% from Rs 600.3 crore in the preceding quarter, while on a year-on-year (YoY) basis it increased by 34.16% from Rs 703.17 crore in the corresponding quarter last year. In a statement to the parliament, Union minister of state for telecom Manoj Sinha revealed that MTNL’s losses for 2016–17 were the same as that in 2017–18, Rs 2971 crore.

Total income recovered stood at Rs 607.7 crore, down 8% quarter-on-quarter (QoQ) from Rs 660 crore in Q4FY18, and down 25.22% from a total income of Rs 812.7 crore in Q1FY18. Operating income also stood at Rs 492.3 crore for the quarter, the same as the preceding quarter, and significantly down 25.1% from Rs 657.2 crore in the same quarter last year.

Segment Revenues

Basic (Fixed line and Broadband) revenue stood at Rs 430.8 crore, a decline of 2.3% QoQ from Rs 440.6 crore in Q4FY18. In Q1FY18, this segment had posted revenues of Rs 555.7 crore, representing a decrease of 22.5% as compared to this Q1FY19. The segment posted losses of Rs 372.8 crore, decreasing somewhat from losses of Rs 428.4 crore in the preceding quarter, and a loss of Rs 296.6 crore in the corresponding quarter last year.

Cellular segment revenues stood at Rs 62.6 crore, up 19% from Rs 52.6 crore in the previous quarter, and ~60% of the Rs 101.9 crore revenues posted in Q1FY18. The losses posted by the segment marginally decreased this quarter by 6% at Rs 177.1 crore, as compared to losses of Rs 168 crore in the preceding quarter. However, losses widened on YoY basis, as the segment reported a loss of Rs 127 crore in Q4FY17.

MTNL net worth eroded in Q3FY18

In the audit report for Q3FY18, auditors said that MTNL’s net worth is completely eroded. It added that the company’s net cash loss during the quarter and period ended December 31, 2017, as well as in the FY2016, its current liabilities exceeded the current assets substantially. The report also mentioned 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 that the government had, last year, considered merging BSNL and MTNL in the Lok Sabha 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.

How the government plans to keep MTNL afloat

BSNL has been declared as “Incipient Sick” as per DPE’s guidelines for incurring losses for the last 3 years consecutively. Telecom minister Manoj Sinha said, “Accordingly, action has been initiated by the DoT for preparation of revival/restructuring plan of BSNL.” Sinha attached a detailed list of financial assistance given to BSNL and MTNL in loan waivers and financial support in operations:

  • Refund of surrendered BWA (Broadband Wireless Access) spectrum in two service areas held by MTNL. Under this head, Rs 4533.97 crore has been refunded to MTNL through bonds.
  • The pension liability of MTNL staff who were absorbed from DoT has been taken over by the Government.
  • Financial support of Rs 492.26 crore was given to MTNL on account of liability arising from levy of Minimum Alternate Tax (MAT).
  • Refund of Rs 458.04 crore to MTNL on account of surrender of CDMA (Code Division Multiple Access) spectrum.
  • Provision of High Speed Internet on Fibre To The Home (FTTH) and Wi-Fi at the residences of Hon’ble MPs. The Project cost of Rs 43.2 Crore was funded by DoT.

Download: Financials

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