MTNL Loan Defaults Surge to ₹8,659 Crore
Why in News?
Recently state owned telecom operator MTNL said that its loan defaults have touched ₹8,659 crore by July 2025. The dues were ₹8,584 crore a month earlier. The company informed stock exchanges about the increase.
MTNL Loan Defaults Surge: Highlights
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- The public sector telecom company Mahanagar Telephone Nigam Limited (MTNL) reported higher loan defaults, widening its already heavy debt in 2025.
- Loan Defaults: MTNL informed that its loan defaults touched ₹8,659 crore by the end of July 2025. This is slightly higher than the ₹8,584 crore reported at the end of June 2025. The rise came mainly because of an increase in unpaid interest. Out of the total dues, ₹7,794 crore is principal and ₹864 crore is interest.
- Debt Burden: The total debt of the company reached ₹34,577 crore in July 2025. In June 2025, it was ₹34,484 crore, which shows a steady rise. The debt includes bank loans, sovereign-guaranteed bonds, and borrowings from the Department of Telecommunications. The growing debt pile makes it difficult for the company to reduce defaults.
- Interest Payment: The increase in default is largely because of higher interest obligations. Interest dues rose from ₹790 crore in June 2025 to ₹864 crore in July 2025. The unchanged principal amount shows that the company struggles mainly with servicing interest payments.
- Market Performance: The company’s share fell by 14% in the last one month and by 28% in one year. As of mid-August 2025, MTNL’s market capitalization stands at ₹2,720 crore. The share price showed a short-term gain of around 2% on August 18, but overall investor confidence remains weak.
Debt Distribution of MTNL among Different Banks
- Union Bank of India: MTNL owes the largest share to Union Bank of India. The outstanding dues stand at ₹3,768 crore in July 2025. The amount includes ₹3,334 crore principal and ₹434 crore interest. Union Bank carries the highest exposure among all lenders.
- Indian Overseas Bank: The second largest exposure is with Indian Overseas Bank. The company’s dues reached ₹2,455 crore, which includes ₹2,300 crore principal and ₹155 crore interest. The bank has faced rising stress from corporate loans in the past.
- Bank of India: Bank of India has dues of ₹1,131 crore from MTNL. Out of this, ₹999 crore is principal and ₹132 crore is interest. The steady rise in unpaid interest reflects liquidity issues of the telecom company.
- Punjab National Bank: The exposure of Punjab National Bank (PNB) is ₹478 crore. The breakup shows ₹432 crore principal and ₹46 crore interest.
- State Bank of India: State Bank of India (SBI) also holds dues. Dues reached ₹363 crore. This includes ₹314 crore principal and ₹50 crore interest.
- UCO Bank: UCO Bank reported dues of ₹276 crore from MTNL. The principal share is ₹246 crore and the interest is ₹30 crore. The bank has limited capacity to absorb rising NPAs, and defaults from MTNL.
- Punjab and Sind Bank: The smallest exposure among the group is with Punjab and Sind Bank. The dues stand at ₹186 crore, with ₹168 crore principal and ₹18 crore interest.
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Mahanagar Telephone Nigam Limited (MTNL)
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Future Outlook of MTNL
- Merger with BSNL: The government has discussed merging MTNL with Bharat Sanchar Nigam Limited (BSNL) since 2019. The merger could bring operational efficiency, but the process is delayed because of MTNL’s high debt.
- Technology Upgrade: MTNL still struggles to provide 4G services at scale, while private operators have already moved towards 5G by 2022–2023. Without investment in modern networks, MTNL will continue to lose market share in Delhi and Mumbai.
- Government Support: The company cannot survive without government support. Earlier revival packages in 2019 and 2020 included sovereign guarantees and voluntary retirement schemes. Similar support will be required in the coming years to manage debt repayments and employee costs.
