08 October 2024

Just three weeks after India’s Union Bank froze the accounts of state-run telecom firm MTNL over non-payment of dues, local media reports that at least half a dozen lenders classified loans to MTNL as non-performing assets (NPA) in August.

MTNL has defaulted on payments to several banks from which it had earlier raised about US$664 million in debt but is said to have borrowings of about US$938 million from banks and financial institutions, and total debt of US$3.8 billion.

MTNL has suggested a debt recast plan which involves the payment of 40% of dues. Lenders have rejected this. However, it’s not clear how MTNL will be able to find even these sums. It has issued some U$3.3 billion in bonds, which have unconditional government guarantees; however, the loans are not guaranteed.

To improve the fortunes of MTNL, the government has proposed rolling out 4G services, growing the telecom network, and de-stressing balance sheets. BSNL is apparently now handling the operations of MTNL and so will launch the 4G spectrum allocated for MTNL in Delhi and Mumbai.