Telecom ministry slammed MTNL for poor show ahead of bailout package

Jayati Ghose Posted online: Wednesday, Jan 15, 2014 at 0000 hrs
New Delhi : State run telecom player Mahanagar Telephone Nigam (MTNL) was last month hauled up by the telecom ministry for its dismal performance. The telecom company was last week granted a Rs 4,600-crore bailout package by the government by way of surrendering its broadband spectrum.

According to the minutes of a meeting to review MTNL’s performance, a copy of which has been reviewed by FE, the department of telecom (DoT) noted the PSU did not meet its targets of gaining market share, adding new broadband subscribers or correcting landline fault rates.

The meeting, chaired by DoT’s additional secretary (telecom), also noted the company has not given a right picture of its financial position.

MTNL has been registering losses since 2008-09. In 2012-13, the company recorded a net loss of R5,321.12 crore. The annual revenue of the company stood at R3,428.6 crore in the same fiscal.

The PSU telecom player has been told to reduce “the gap between targets and achievements and ensure quality of service”. DoT also asked MTNL to improve landline services. The company provides landline phones in Delhi and Mumbai.

Against a target of 11%, MTNL has been able to achieve mobile subscriber market share of only 8.07% (till September 2013). Moreover, fault rate per 100 telephone/month for wireline network is 7.83 as against Trai benchmark of less than 5, said DoT in the meeting.

The telecom department also noted MTNL had not added any new switching capacity despite a target of 10 lakh. While laying of optic fibre cable fell short by 12,311 kilometer from a target of 15,000 km; addition of broadband subscribers linked with fixed line stood a little over 27,000 against the target of 1,50,000.

MTNL, which plans to turn profitable by 2017-18, is in the process of focusing on reducing its debt burden and neutralising interest payment. The plan also includes investing around R500 crore annually to maintain its market share and getting R5,925 crore as lumpsum payment to resolve pension cost. Overall, the salary and pension expenses of MTNL employees is estimated to form around 153% of the company’s revenue.

A group of ministers (GoM), headed by the finance minister has decided the government would bear the pension burden for about 43,000 MTNL employees absorbed from the DoT.