Consulting firm Deloitte has suggested two main methods of revival to MTNL which include outright merger with BSNL or sale of its wireless division to BSNL as among the various methods which can rehabilitate the sick telecom PSU, a senior MTNL executive said today.
“In the Deloitte report, there are two options –Option 1 and 2. In Option 1, there are many methods the Government can try to implement any of these options and option 2 is straight merger with BSNL.
In option 1, the various methods are-- VRS, financial support, monetisation of assets, reduction of age to 58 years. One of the method under this option is the wireless division sale to BSNL”, P K Purwar, CMD, MTNL told Bureaucracy Today .
“There are many options. Government being the owner has to take a call. They have to think what is the best in the interest of both the organisation. They have formed a committee. These are broadly the recommendations of Deloitte on MTNL restructuring”, he said.
The proposal of Deloitte on MTNL wireless division sale to BSNL could have been done on the line of Aircel – Rcom deal where the mobile business is sold to Aircel in a demerger scheme.
The CMD said the report has already been sent to DoT. DoT has engaged IIM Banaglore as a consultant. Multiple views are available with the Government to take a view.
With the PSU’s trying time with poor finances continue, Purwar said the company has tied up funds for the next one year with the help of a comfort letter from the Government.
“I don’t see any challenge in the next 6-12 months. We are fully funded. We are comfortable for the shorter run. We have tied up for funds Rs 2000 crore from the banks with the help of a comfort letter from the Government”, he said.
Earlier , Communication Minister Manoj Sinha had said “MTNL’s revival and restructuring have been studied by the consultant Deloitte and has submitted the report to the company on March 27. The board of MTNL after discussing it has sent it to the DoT for charting the next course of action. A committee has been formed by DoT. It will take a decision soon after which we would know the way forward on MTNL”.
On continuous slides on profit, revenue and subscriber fronts, MTNL has posted a net loss of Rs 634.8 crore for the quarter ended on 31 March 2017. The company had posted net profit of Rs188.64 crore in the fourth quarter of FY16.
For the year ended March 2017, MTNL’s net loss widened to Rs 2,963.05 crore from Rs 1,945.86 crore at the end of the previous fiscal. The annual income of MTNL also declined by 3.6% to Rs 3,654.69 crore for 2016-17 from Rs 3,793.89 crore at the end of 2015-16.
It is surviving on borrowed funds for daily operations and has an accumulated debt of Rs 15,000 crore exclusively on itself. Due to heavy borrowing, its finance cost is also rising stretching its accounts. MTNL had written to DoT seeking to monetise its real estate in the metros which the PSU feels can fetch it about Rs 4000 crore. DoT has not responded on this. Over half of its revenues goes towards meeting HR costs.