The government is planning a capital infusion of Rs 394.58 billion in the two state run entities, Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) over the next five years, in order to restore their financial health.
Both the entities are facing decline in revenue due to loss of market share, increasing expenditure and inability to invest in network expansion. BSNL’s subscriber market share declined to about 11 per cent as of end-May 2014, from about 15 per cent in 2009. Meanwhile, MTNL’s subscriber share has been halved to 4.8 per cent from about 11 per cent in the same time.
As of quarter ended June 2014, the total debt of both the companies stood at Rs 212.08 billion. Moreover, official sources reported significant increases in debt incurred for both BSNL and MTNL. While BSNL?s debt has risen from Rs 33.35 billion in March 2012 to Rs 64.48 billion in June 2014, MTNL?s debt has risen from Rs 96.48 billion to Rs 147.6 billion during the same period.
BSNL has been incurring losses for the last five years which touched Rs 70.85 billion in 2013-14. On the other hand, MTNL reported profits of Rs 78.25 billion in 2013-14 due to write back of provisions on account of pension liabilities and spectrum amortisation costs.
The government has been trying to restore the financial health of these public sector companies.
