New Delhi: Cash-strapped state telco MTNL has received a Rs 120 crore lifeline from Department of Telecom recently to help it pay the salary of its staff for the month of November, reflecting the worsening financial position of the PSU.
“We have cleared some old dues of MTNL and paid them Rs 120 crore for salary payment in November after they approached DoT for this. Their expenditure remains same but revenues are falling. There were some old dues to be paid to them for services rendered by MTNL and we will pay another Rs 160 crore also. The dues related to phone bills, rentals for using buildings of MTNL and were spread over the last 15 years. We have not done verification of their claims but have given them the funds on adhoc basis due to their urgency,” DoT sources said.
MTNL chairman and MD told FC, “We didn’t seek any grant from DoT. We have asked for the pending issues to be settled. Some of them are long pending legacy issues, MTNL I see approximately should receive Rs 1,300-Rs 2,000 crore for settlement of its earlier dues and these related to GPF of employees, earlier bonds interest payment which we had raised on behalf of the DoT and the department has to pay us the remaining interest amount to the tune of Rs 400 crore. We have reasoned our case to DoT.” He however, clarified that the DoT has not got back to MTNL on the above claims.
MTNL’s monthly salary bill is Rs 200 crore and its accumulated losses stand at Rs 2,936 crore. Its total debt at the end of the second quarter was Rs 19,000 crore and losses were Rs 859 crore in Q2. It has 23,000 staff. Its wage bill is 92 per cent of its annualised revenues. At 5.34 per cent down, MTNL share price closed at Rs 12.70 on Friday and its market cap stood at Rs 784.98 crore.
The PSU had four years ago tried to bring a VRS to cut down 10,000 staff and had asked the DoT to fund it. The proposal had failed to get cabinet nod. Now, too MTNL has sought DoT funding assistance for its proposed VRS programme. “We have a VRS plan to cut the staff strength by 10,000 and it will cost Rs 2,500 crore. We have requested DoT to provide for our VRS and approach the cabinet for this,” Purwar said.
The once Navratna company’s net worth has been eroded completely, its auditors have pointed out to its precarious financial position when the liabilities are higher than assets and the higher current and future asset values erosion probabilities. Recently the ailing state carrier Air India also failed to pay its staff and government had to infuse Rs 980 crore to pay salaries in August.
With tough competition from Jio, declining subscribers in thousands, having a legacy network and no 4G spectrum to offer at par mobile services, just two circles of Mumbai and Delhi and with a huge workforce , the finances of this once profitable PSU is only expected to go down unless government takes some immediate steps.