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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