The government will no longer infuse any fresh capital into ailing Mahanagar Telephone Nigam (MTNL), but may not initiate its closure right away, as this would be done only after the company clears its liabilities of around Rs 32,000 crore, according to official sources.
To generate funds for expunging the liabilities, the company has been asked to generate revenues from asset monetisation and operations, and bring in efficiency to reduce costs, the sources added.
With little prospects of the revival of MTNL, the government is clear that the company will have to be wound up ultimately, most probably within a decade. But for this, all the liabilities need to be cleared and assets disposed of, the sources said, adding that this was the reason for not closing it down straightway.
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Currently, the Central government owns a 56.25% stake in the state-run telecom operator, which provides services in Delhi and Mumbai. The public holds 43.75%, including 13.12% owned by Life Insurance Corporation of India (LIC).
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The government had approved the first revival package for BSNL and MTNL in 2019. In 2022, it approved a second revival package for BSNL/MTNL amounting to Rs 1.64 lakh crore, where the share of MTNL is relatively less.
After the recent speculative spike in MTNL’s share price in the hope of the company being delisted, the stock has started to recede after the government indicated that there is no such plan. With the company having varied liabilities that are to be met, the shareholders won’t get anything in case of a closure, a senior official had earlier told FE.
In the last six months, the company has defaulted on bank loan payments worth Rs 1,600 crore. The company also has other liabilities such as AGR and spectrum dues to the government
“How do you close a company which has liabilities till 2034?
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