Cabinet Meeting Next Week to discuss Future of MTNL; Loan Defaults and Monetization will be Discussed

As per reports, Cabinet secretary TV Somanathan will hold a meeting next week with various stakeholders to discuss the future of stressed state-run telecom company Mahanagar Telephone Nigam Ltd (MTNL). In meeting discussions will also be held related to its loan defaults.

MTNL has defaulted on ₹8,346 crore in loan repayments to multiple banks, including Union Bank of India, Indian Overseas Bank, Bank of India, Punjab National Bank and State Bank of India among others-all state-run lenders-as of April 30. This includes ₹7,794 crore in outstanding principal and ₹552 crore in overdue interest and penal charges.

This will be a detailed meeting involving all the stakeholders and concerned departments to arrive at a detailed roadmap for revival of the company’s financial health, possible rejig in business model to optimise profit and fastrack its asset monetisation.

The meeting is expected to be attended by the telecom secretary, expenditure secretary and other top officials of the finance ministry. It may include executives of banks that have loan exposure to MTNL.

The meeting will discuss short-term measures-how to immediately address the loan defaults-and, long term-how to monetise assets, merge operations and minimise losses.

Banks had raised the MTNL matter at their last meeting on May 9 with finance ministry officials and sought an immediate resolution of the loan defaults.

Apart from the bank loans, MTNL has liabilities of ₹24,071 crore in the form of sovereign guarantee bonds besides ₹1,151 crore owed to the Department of Telecommunications in bond interest payments.

This adds up to financial debt of ₹33,568 crore as of March 31. The SG bonds issued by MTNL have to be repaid by 2034. The government has no immediate plan to close the company and is trying to revive it. However, it’s not in favour of spending any substantial amounts of money to revive MTNL.