State-run telecom service provider, Mahanagar Telecom Nigam Limited (MTNL) is already conducting its revival talks with the DoT. As part of the talks, the Department of Telecommunications has asked MTNL to draft a long-term roadmap on how the telco is planning to sustain the competitive Indian telecom market. All the top private telcos- Airtel, Vodafone Idea and Reliance Jio have a pan-India footprint, but MTNL is providing services in just two circles. DoT questioned MTNL on how the telco is planning to go against the private telcos having a pan-India 4G footprint.
MTNL Incurring Losses Since a Long Time
MTNL has been incurring losses for a number of years and was declared as incipient sick as per the Department of Public Enterprises guidelines. A revival plan of MTNL, prepared by its consultant, is currently under consideration in Department of Telecom (DoT), said the company’s CMD.
“An internal committee on revival, too, has listed out various options and the finance branch of DoT has raised specific queries including what should be the long-term roadmap for MTNL, given that all other players now have a pan-India operation,” MTNL Chief P K Purwar told PTI.
MTNL has responded to the queries raised by the DoT, Purwar added.
“DoT’s finance branch has said it should not be a one-off transaction… that it should be a long-term view from the ministry to take MTNL forward, in a scenario where everyone is a pan-India player,” he noted.
Bruised by a fierce competition from private sector players, MTNL’s losses were pegged at Rs 2,893 crore in 2014-15, Rs 2,005 crore in 2015-16, and Rs 2,970 crore in 2016-17. MTNL’s debt exceeds Rs 17,000 crore.
Purwar said a long-term direction for MTNL has to first take into account issues ailing the company.
MTNL Has Three Ailing Factors
“There are three ailing factors for the company. One is the employee wage bill. Secondly, the debt issues need to be taken care of, so that the company can work efficiently. The third is the investment in the network to create newer and modernised infrastructure,” he said.
Beyond that, there has to be a “top-level view” on whether a company in mobile or fixed line service can function on two circle operations — Delhi and Mumbai — when all other operators have “pan India traffic and pan India tariff.”
“It has to be about making the company suitable, such that pan India operation can be worked out…either through operational synergy with BSNL or entity-level synergy,” Purwar said but quickly added that a call on such issues is for the government to take.
“But, I will say synergy is certainly required for me. As a long-term player, being present in the telecom market in just two circles is not a viable proposition. Viability needs to be created by a synergistic approach, and BSNL, too, has a similar problem because they are not present in Delhi and Mumbai, which are two prime circles,” he said, as reported by PTI.
Once a household name, MTNL, which provides services in Delhi and Mumbai, has been relegated to a distant fourth operator in the market alongside Bharat Sanchar Nigam Ltd, another telecom PSU.
This was when, one billion subscribers-plus mobile markets in India – incidentally world’s second largest after China, is growing exponentially as private operators like Vodafone Idea Ltd, Bharti Airtel and Reliance Jio compete fiercely to lure subscribers with rock-bottom data tariffs and attractive offers.
The government in the past has categorically ruled out any plans to merge BSNL and MTNL, but has time and again talked of a strategic plan for promoting synergy among the two state-owned telecom firms.
“Merger is a promoter’s call, not a manager’s call. As a manager, I feel that operational synergy has to be there. If not, it will be difficult for both the organisations to continue to be competitive in the market in the long run…Because, you are creating a stack of cost to each other from a customer point of view, while other operators which are a single entity don’t have such costs,” Purwar said.