The government on Wednesday said legacy staff cost, cut throat tariff war, and absence of 4G services are some of the major reasons for losses at state-owned telecom firm MTNL.
The government on Wednesday said legacy staff cost, cut throat tariff war, and absence of 4G services are some of the major reasons for losses at state-owned telecom firm MTNL. Telecom Minister Manoj Sinha informed the Lok Sabha that the Department of Telecom has has received revival plan of MTNL, which has been declared ‘Incipient Sick’, as per the Department of Public Enterprises guidelines. Mahanagar Telephone Nigam Limited (MTNL) has licence to operate in Delhi and Mumbai.
“One of the major reasons for losses of MTNL is huge legacy staff cost. Besides, the service revenue is declining due to intense competition resulting into cut throat tariffs, inability of MTNL to infuse capital expenditure (CAPEX) to upgrade its network. All private telecom operators are offering 4G services leading to churn in mobile segment of MTNL. Due to this MTNL’s revenue from operation has reduced,” Sinha said.
In the second quarter ended September 30, 2018, MTNL reported widening of its loss to Rs 859 crore and the company’s total income declined by 21 per cent to Rs 621.26 crore on standalone basis. The employee cost accounted for 92.2 per cent of total income of the company and around 29 per cent more than its revenue from operations at Rs 572.83 crore. The annual loss of MTNL has been stagnant at Rs 2,970 crore during 2016-17 and 2017-18.