MTNL Q1 loss narrows to ₹773.46 cr; sigs 10-yr service agreement with BSNL

State-owned Mahanagar Telephone Nigam Limited (MTNL) has signed a 10-year service agreement with BSNL in its board meeting on Wednesday, according to an exchange filing. The agreement, which can be revoked with six months' notice or extended by mutual consent, is subject to approval by the Department of Telecommunications (DoT) and the Ministry of Corporate Affairs (MCA).

The cabinet had previously approved a revival plan for BSNL and MTNL, which included reducing employee costs, allocating 4G spectrum, restructuring debt, and monetising assets. The plan also involved the merger of BSNL and MTNL and raising ₹17,571 crore through sovereign guarantee bonds by March 31, 2024, to address and restructure debt.

While specific details of the service agreement were not disclosed, MTNL also announced additional approvals, including the closure of its wholly-owned subsidiary, Millennium Telecom Limited (MTL), which provided telecommunications solutions to international businesses. This closure, approved by the Union Cabinet, requires Presidential Approval and will be forwarded by the Department of Telecommunications (DoT) to DIPAM for in-principle approval.

The telecom company also announced the sale of MTNL's shares in its overseas subsidiary, Mahanagar Telephone (Mauritius) Ltd (MTML), and in MTNL STPI IT Services Ltd (MSITS). MTNL-STPI IT Services is a 50:50 joint venture between Software Technology Parks of India (STPI) and MTNL.  If STPI declines to purchase MTNL's stake, the shares may be offered to other PSUs, and state governments, or sold through competitive bidding, according to the press release.

In addition to the recent announcements, the company released its Q1 financial results.

Net losses decreased to ₹773.46 crore from ₹851.93 crore in the year ago period, while revenue from operations fell to ₹183.85 crore in the first quarter this year from ₹199.48 crore in last year's first quarter. Total income, however, increased to ₹382.35 crore from ₹312.55 crore, a 22% year-on-year growth. Despite competitive pressures, the company reduced its license fees and spectrum charges from ₹18.43 crore to ₹16.72 crore.

Shares of MTNL opened today at ₹59.80 and closed at ₹62.95, up 5% from yesterday. The cellular and fixed-line services company currently has a market capitalisation of ₹3,965.85.