Mahanagar Telephone Nigam (MTNL) is a state-owned telecom utility that provides fixed line and other services in Delhi and Mumbai. The telco is 56% owned by the government with approximately 3.5 million fixed lines in service.
MTNL posted a net loss of $135 million during 2010 second quarter against a marginal profit of around $5 million, attributable to higher staff expenses. Wage revisions implemented during the March quarter of 2010 were responsible for this loss. MTNL currently has 45,000 employees and spent 30% of its revenues during the last fiscal 2009-10 on employee wages.
Operating losses are not a new phenomena. The company has been running at a loss since 2007 and only interest income, on account of excess on its books, has helped MTNL to come into green in the past two years. However, MTNL has spent its excess cash pile for the enrollment of 3G and broadband services, which will not help its profitability going ahead.
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