New Delhi: The government will handle all future bond payments for Mahanagar Telephone Nigam Ltd. (MTNL) as the state-owned company deals with a liquidity crisis, according to a Bloomberg report.
The financially troubled company owes 426.8 billion rupees ($5.1 billion) in interest and principal on local-currency bonds guaranteed by the government, due by 2034, as per data compiled by Bloomberg. Of this amount, 46.2 billion rupees are due later this year.
The company is now insolvent, said the source, who requested anonymity.
The government has already covered MTNL’s bond payment this month after the operator indicated it didn't have enough funds to pay the interest.
The telecom sector has seen rapid growth in recent years, driven by economic expansion and increased mobile-phone usage.
However, state-owned operators like MTNL have struggled to compete with private companies such as Reliance Jio Infocomm Ltd. and Bharti Airtel Ltd. MTNL's losses increased to 32.7 billion rupees in the year ending March 2024, up from 29.2 billion rupees the previous year.
This month, Care Ratings downgraded the rating on MTNL's 116.4 billion rupees in loan facilities to D, citing delays in servicing bank credit. This loan facility is not guaranteed by the government.
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