InvestorQ : Is it true that MTNL and BSNL have turned around to profitability?
Moii Chavate made post

Is it true that MTNL and BSNL have turned around to profitability?

Tisha Malhotra answered.
1 year ago

Let me clarify that MTNL and BSNL have not turned profitable but they are expecting to turn EBITDA-positive. That means the revenue from operations will be more than the cost of operations. This is before the impact of interest, depreciation and amortization and hence MTNL and BSNL may continue to make net losses for some more time.

The good news is that the sharp reduction in manpower as a result of the VRS has esulted in huge cost savings and that has helped both the companies, MTNL and BSNL to turn profitable on a EBITDA basis by end of this financial year. To that extent, that is surely some good news on the telecom front.

In addition, the government has also indicated that the Department of Telecommunications or DOT will also be allocating 4G spectrum to BSNL on a pan-India basis. This will help these government owned telecom companies to come at par with the private telecom players at least in terms of technology competence levels.

Last year, nearly 93,000 employees of BSNL and MTNL had opted for the voluntary retirement scheme or VRS offered. As a result, the salary bill of BSNL has fallen 50% to Rs.600 crore while that of MTNL has fallen by 75% at Rs.140 crore per month. Government ha also decided to extent the sovereign guarantee of Rs.15,000 crore for the telcos.