People talk on their mobile phones in Mumbai, India (Photographer: Dhiraj Singh/Bloomberg)

MTNL To Invest Rs 190 Crore To Improve Services, Says Telecom Minister

The government has asked Mahanagar Telephone Nigam Ltd. to invest Rs 190 crore to improve its network and services as it looks to revive the debt-laden company.

“We had hired a consultant for MTNL’s revival and have received some recommendations,” Telecom Minister Manoj Sinha told BloombergQuint on the sidelines of 5G India conference in Mumbai. The company will focus on improving its network over the next 3-4 months and will service new government projects in Delhi and Mumbai, he added.

The mobile and landline services provider had a debt of Rs 19,510 crore as of March 31, 2017. The company said in its annual report that it had no operating margin to cover the interest payment and may face a liquidity crunch in near future. “Payment of interest as well as repayment of principal is a challenge for MTNL unless it receives government support to mitigate debt,” the company said.

MTNL needs an investment of Rs 2,000-2,500 crore over the next 2-3 years for up-gradation and expansion, as of March 31, 2017, according to its annual report for the year 2016-17. “The Rs 190 crore will be utilised from internal accruals for optical fibre network strengthening in the Mumbai area,” said PK Purwar, chairman and managing director of MTNL.

The telecom firm is looking to monetise its real estate assets in Delhi and Mumbai in the near future to pare debt and meet future capital requirements, said Purwar. The monetisation till take place in two phases. In the first phase, the state-owned operator will sell assets worth Rs 280 crore this financial year. “There are issues that need to be ironed out before the second stage of asset sale worth Rs 3,000 crore begins,” he said.

In its annual statement, MTNL had said that it cannot monetise or sell its properties until it pays registration and stamp duties on some of its properties that could be liable.

For now, there is no proposal to merge the company with state-owned Bharat Sanchar Nigam Ltd. (BSNL), Sinha said.