Cutthroat Tariff War and Lack of 4G Services Hurting MTNL: Government

By December 12th, 2018 AT 6:57 PM

The government on Wednesday said legacy staff cost, cutthroat tariff war, and absence of 4G services are some of the major reasons for losses at state-owned telecom firm MTNL. Telecom Minister Manoj Sinha informed the Lok Sabha that the Department of Telecom had received revival plan of MTNL, which has been declared ‘Incipient Sick’, as per the Department of Public Enterprises guidelines.

mtnl-4g-services-tariff-war

Mahanagar Telephone Nigam Limited (MTNL) currently has the licence to operate in Delhi and Mumbai. “One of the major reasons for losses of MTNL is huge legacy staff cost. Besides, the service revenue is declining due to intense competition resulting in cut-throat tariffs, the inability of MTNL to infuse capital expenditure (CAPEX) to upgrade its network. All private telecom operators are offering 4G services leading to churn in mobile segment of MTNL. Due to this MTNL’s revenue from the operation has reduced,” Sinha said, according to PTI.

In the second quarter ended September 30, 2018, MTNL reported widening of its loss to Rs 859 crore and the company’s total income declined by 21% to Rs 621.26 crore on a standalone basis. The employee cost accounted for 92.2% of the total income of the company and around 29% more than its revenue from operations at Rs 572.83 crore.

The annual loss of MTNL has been stagnant at Rs 2,970 crore during 2016-17 and 2017-18. Not only MTNL, its counterpart, Bharat Sanchar Nigam Limited also lacks 4G services across the 20 telecom circles where it’s operating. Although in recent times BSNL has launched 4G in some parts of the country, the pan-India rollout is awaited. Right now, the government is said to be delaying the allotment of 4G spectrum to both MTNL and BSNL. Once the telcos acquire 4G airwaves from the government, it will be a matter of time for them to launch 4G in the country.

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Nikhil Mumbai-Punetri_visTris_VisKiran Fernandes | GoaDGupta Recent comment authors
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Tris_Vis
Tris_Vis

The govt and ministers know everything that is wrong, but and yet they didnt and won’t do anything for several years to resolve the same. Crony capitalism and vested interests at it’s best.

tri_vis
tri_vis

Above id is Not mine.
tri_vis is real, above is fake.

Nikhil Mumbai-Pune
Nikhil Mumbai-Pune

+1

But I guess delayed auctions will help Avoid. People are really pissed off with Jio.

DGupta
DGupta

These are excuses. Even before 4G, MTNL was making losses and losing subscribers. MTNL is overstaffed, and employees don’t care about MTNL’s health. They treat it as a purely govt department that you can keep getting your salaries from whether you work or not. Even the small set of working employees in MTNL can’t achieve results with this vast majority of chalta hai staff. MTNL should be sent to IBC, and BSNL can then pick it up at zero equity cost. At least BSNL’s scale benefits may reduce MTNL costs. If that does not look possible, just shut it down.… Read more »

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