It all started back in 1986 when the government established Mahanagar Telephone Nigam Limited (MTNL) to bolster telecom services in India’s two major cities — Mumbai and Delhi. Initially, the company flourished, holding a monopoly over landline connections and even achieving a milestone by being the first to introduce 3G services in 2008. However, the success was short-lived.
The telecom landscape soon changed dramatically with the entry of private giants like Airtel and Vodafone, offering faster networks and better services. The disruption intensified when Jio entered the market, delivering ultra-low-cost, high-speed internet, reshaping consumer expectations overnight.
Meanwhile, MTNL struggled to keep pace. While competitors rolled out 4G and laid the groundwork for 5G, MTNL was still trying to solidify its 3G presence. Even today, despite significant government support and assistance from BSNL, MTNL’s 4G services barely register a presence.
And this was just the tip of the iceberg.
In the telecom world, once customers switch for better service, they rarely return — a reality MTNL faced head-on. Its customer base shrank drastically, leaving it with a mere 5.2% share in India’s wireline segment and a negligible 0.1% in wireless. Revenue nosedived from ₹3,000 crores in 2015 to approximately ₹800 crores in 2024. Meanwhile, annual losses remained stubbornly high — ₹2,900 crores in 2015, climbing to ₹3,200 crores in 2024. To keep operations running, MTNL issued bonds backed by government guarantees and borrowed from banks, which only piled on more interest expenses.
Another major hurdle was the bloated workforce. MTNL’s employee-to-customer ratio was the highest among telcos, leading to enormous salary and pension obligations. Even as income declined, expenses remained largely unchanged.
The signs were clear.
Given MTNL’s public sector status, the government attempted to rescue it. In 2019, it rolled out a ₹69,000 crore revival package involving a merger with BSNL, free allocation of 4G spectrum, and a voluntary retirement scheme (VRS) to shrink the workforce. About 14,000 employees opted for VRS, trimming staff strength by over 90%.
Yet, the revival efforts yielded little. Revenue continued to fall, the allotted 4G spectrum remained unused, and the promised 4G rollout failed to materialize.
The government kept injecting funds — ₹1.64 lakh crores in a second bailout, ₹89,047 crores more later, and a recent infusion of ₹6,000 crores — bringing the total financial support to over ₹3.2 lakh crores to sustain MTNL and BSNL.
However, MTNL’s situation barely improved. BSNL now manages MTNL’s day-to-day operations under a service agreement, taking charge temporarily to evaluate risks without fully merging the two. Essentially, MTNL is now a hollow shell.
And that brings us to another pressing concern.
As of March 2025, MTNL’s liabilities stand at ₹33,500 crores, including bank loans, sovereign-backed bonds, and dues to the Department of Telecommunications (DoT).
Worse, MTNL has defaulted on its bank loans.
Banks have now classified MTNL as a non-performing asset (NPA), acknowledging that repayment may never come. They’ve formed a consortium to recover dues. Technically, they could drag MTNL to insolvency court, but practically, it’s rare for government-owned entities to face such proceedings. At the government’s urging, lenders have currently paused any insolvency action.
So, banks are left with two options: either wait or accept losses. MTNL has proposed repaying only 40% of its dues, effectively asking lenders to accept a 60% haircut. Banks, predictably unhappy, have countered by proposing a 20% haircut. Yet, even this is shaky given MTNL’s deteriorating financial health — it loses more money in a quarter than it earns in a year.
What lies ahead?
For now, there’s no new bailout on the horizon. The government isn’t infusing fresh funds nor actively shutting MTNL down. It seems to be letting the company fade into obscurity while BSNL handles operations.
However, taxpayers continue to bear the burden.
Since the government guaranteed MTNL’s bonds, any default means the government must cover repayments — funded, of course, through taxpayer money. If banks write off loans, they’ll absorb losses, needing fresh capital — again sourced from public funds.
And this isn’t an isolated case. Similar bailouts have happened before — like absorbing Air India’s debt before privatization, or infusing over ₹3 lakh crores into public sector banks to deal with bad loans, or the ballooning liabilities of infrastructure bodies like NHAI.
MTNL is simply the latest addition to this growing list.
Attempts have been made to sell MTNL’s assets — land, buildings, towers — raising around ₹2,100 crores. But it’s a drop in the ocean compared to its debt.
Today, MTNL finds itself in a strange limbo: barely serving customers, unable to modernize, generating negligible revenues, yet not officially shut down either.
MTNL itself acknowledges its grim reality in its reports:
“The existing network of MTNL has become obsolete. The heavy debt burden and recurring losses over the past 12 years have created a financial crisis, making it impossible for MTNL to invest in modernizing, upgrading, and expanding its network.”
Despite everything, MTNL’s stock price occasionally rises — perhaps fuelled by investor hopes of a BSNL merger, a privatization deal, or asset monetization. But the company’s fundamentals tell a different story: mounting liabilities, tiny revenues, and an unsustainable business model.
The broader concern is not just MTNL’s fate, but how public sector enterprises quietly consume taxpayer money year after year, unnoticed, until crises hit the financial system or the national budget.
While the government insists MTNL will continue operating until it clears its obligations, many of its sovereign-guaranteed bonds mature only by 2034. This implies prolonged costs, additional asset sales, and perhaps even more fund infusions.
It’s a vicious cycle — and the government knows it. There’s already speculation that MTNL might be wound down sometime in the next decade.
Which leads to a difficult question: why keep reviving entities that have clearly lost their relevance?
After all, MTNL no longer serves the public effectively, continues to drain taxpayer money, and adds strain to an already overburdened banking sector.
History shows that repeated bailouts rarely bring lasting change. Sometimes, the wisest decision is to recognize when a revival is no longer viable.
When MTNL eventually closes its chapter, it will hardly resemble the trailblazer that once dominated India’s telecom sector. And perhaps, that’s the closure it truly needs.