There will be no default on MTNL bond dues: Telecom Minister Jyotiraditya Scindia

The government on Thursday assured that there will be no default on bond dues of MTNL, and said the state-owned telco's operations will be transferred to BSNL even as its asset monetisation efforts to pay off liabilities are underway.

The Government of India stands behind the sovereign Guarantee bonds, Telecom Minister Jyotiraditya Scindia asserted.

Mahanagar Telephone Nigam Ltd (MTNL's) operations will be transferred to BSNL, and monetisation of assets will take place to pay off liabilities, he said.

"In the interim of monetisation of assets and some bonds coming due, the Sovereign Guarantee Bonds will stand good. Government of India stands behind those bonds and there will be no default and that is what you have seen," Scindia said.

The minister was speaking on the sidelines of a curtain raiser for India Mobile Congress 2024 event scheduled to be held in October.

The government has stepped in to make a Rs 92 crore payment towards immediate bond dues of MTNL, and another Rs 64 crore is also expected to be paid in coming days towards interest obligations that are slated to become due in August.

The helping hand from the government is significant as it averts a crisis-like situation for the telecom corporation which has been teetering on the brink with regard to its debt obligations, particularly in this case government-guaranteed bonds. Last week, the debt-laden firm had expressed its inability to make interest payments to certain bondholders due to paucity of funds.

The second semi-annual interest (7.59 per cent) on certain bonds is falling due on July 20, 2024.

"The second semi-annual interest with regard to 7.59 per cent MTNL's bond series...Is due on July 20, 2024. As per the structured payment mechanism of Tripartite agreement (TPA) signed among MTNL, Department of Telecom and Beacon Trusteeship Ltd, MTNL has to fund the semi-annual interest into the Escrow account with adequate amount 10 days before the due date," MTNL had said in a BSE filing on July 11.

MTNL had informed that in the wake of provisions of TPA, and due to insufficient funds, it could not fund the escrow account with an adequate amount.

MTNL, which offers telecom services in Delhi and Mumbai, has seen a steady erosion in its subscriber base over the past years.

Its losses mounted to Rs 3,267.5 crore for FY24, from Rs 2,915.1 crore in FY23. The revenue from operations for the year ended March 2024 fell to Rs 798.56 crore, down 14.6 per cent from a year ago.