State-Owned MTNL Defaults on 7 PSU Banks' INR 8,346 Crore in Bank Debts

Mahanagar Telephone Nigam Ltd (MTNL), a state-owned telecom service provider, announced on April 19 that it had fallen behind on bank loans from public sector lenders of INR 8,346.24 crore, as per the exchange filing. Seven public sector banks provided loans to the company, including the Union Bank of India, Bank of India, Punjab National Bank, State Bank of India, UCO Bank, Punjab and Sind Bank, and Indian Overseas Bank, according to BSE data. According to the declaration, the total amount of outstanding debt, including both short-term and long-term borrowings, was INR 33,568 crore following the most recent default of INR 8,346.24 crore. To pay the interest on the SG Bond, this is further separated into a bank loan, an SG Bond, and a loan from the Department of Telecom.

How Much MTNL Owes to Each Bank?

MTNL has defaulted on INR 3,633.42 crore to the Union Bank of India, INR 1,077.34 crore to the Bank of India, INR 464.26 crore to the Punjab National Bank, INR 350.05 crore to the State Bank of India, INR 266.39 crore to the UCO Bank, INR 180.30 crore to the Punjab and Sind Bank, and INR 2,374.49 crore to the Indian Overseas Bank, according to the filing data. The loan principal and past-due interest amount are included in the default payment figures, which cover the period from August 2024 to February 2025. In addition, the corporation owes INR 8,346 crore in bank loan defaults, INR 1,151 crore in Department of Telecom debt, and INR 24,071 crore in SG Bond debt.

MTNL a Sinking Ship

The telecom operator is experiencing a serious liquidity shortage as a result of the frequent defaults. In the previous months, the company had sent a series of letters informing the stock exchanges of similar defaults. According to TRAI data, at the end of March 2023, MTNL held a 0.21% market share in the cellular segment and an 8.14% market share in the wireline segment. The business has recently accrued a significant amount of debt and has been reporting losses for a number of years. With the exception of the 2013–14 fiscal year, MTNL has been reporting losses annually since it first disclosed one in the 2008–09 fiscal year. The hefty labour costs borne by both MTNL and BSNL, two public sector undertakings (PSUs), are a major contributing factor to the debt.

MTNL currently employs 3,547 people, while it once employed over 20,000 people in only two service areas. In 2019, around 15,000 workers at MTNL chose to participate in the voluntary retirement plan (VRS). Another major factor contributing to MTNL's collapse was its limited reach. In the National Capital Region (which includes Delhi and the nearby cities of Faridabad, Gurgaon, Noida, and Ghaziabad), Mumbai, Thane, and New Mumbai, it provides both fixed-line and wireless services. In terms of customer experience, MTNL has also failed to match commercial players. Due to years of being the sole service provider, the company was ill-equipped to handle subscribers' issues in a satisfactory manner.