MTNL posts Rs 9,600 cr profit in Q4 thanks to government aid

FINALLY, there is some good news for loss-making state-owned telecom major Mahanagar Telephone Nigam Limited (MTNL) as the PSU reported a profit of Rs 9,600 crore for the quarter ended March 31, 2014. MTNL said in a statement...

that the profit was due to an 'unspecified' exceptional items totalling Rs 10,216.1 crore.

MTNL hasn’t disclosed any specific information on what this exceptional item is, the PSU said it has accounted the excess amount of pension already paid with effect from October 1, 2000 against recoverable amount from the government as an exceptional item, following the Centre's decision to take over the pension liabilities of the telco on lines of BSNL.

This came into effect from March 3, 2014.

Without the exceptional items, MTNL would have posted a loss of Rs 118.5 crore for the quarter as against Rs 976.8 crore loss in the previous quarter. MTNL has also written back provision worth Rs 1,254.2 crore made for employee retirement benefits following the government’s order, which ensured the profits for the quarter. In the previous quarter, MTNL had reported employee retirement benefit cost of Rs 506.4 crore.

MTNL says it has written back provision made earlier for such employees except for the additional amount due to the difference in BSNL and MTNL pay scales.

The telco also notes that it has discontinued accounting for the pensionary benefits of the said employees.

MTNL's total operational revenue was at Rs 841.7 crore for the quarter, down from Rs 853.3 crore in the previous quarter and Rs 918.6 crore in the same quarter last year.

The BWA spectrum refund in the previous quarter also contributed for the the telco’s profits to Rs 8,322 crore for Q4.

The total revenue was at Rs 3,391.7 crore for the year, down from Rs 3,428.7 crore in the previous year.

The basic or fixed line services reported revenues of Rs 2,646 crore for the year FY14, down from Rs 2,696.1 crore in the previous year. The basic or fixed line services still account for a majority of MTNL’s revenues, contributing 77.53 percent of the telco’s Rs 3,412.6 crore revenue, down from 78 percent in the previous year.

On the other hand, revenues from Cellular services grew to Rs 766.9 crore for the year, against Rs 759.3 crore in the previous year. The segment posted a net loss of Rs 105 crore for the year, an improvement from Rs 479.8 crore loss in the previous year. Cellular services contributed around 22.5 percent of MTNL’s revenues for the year, marginally up from 21.97 percent in the previous quarter.

During the quarter, MTNL had mentioned plans to launch public WiFi hotspots in Mumbai and Delhi for its customers. The telco is apparently tying up with malls, food courts and coffee shops to provide unlimited WiFi service at speeds of 8Mbps to its customers.

The proposal to merge BSNL, MTNL and ITI may be considered by the new BJP Government as the the Board for Reconstruction of Public Sector Enterprises (BRPSE) had recommended that MTNL could be brought under BSNL. This is part of the Telecom Ministry’s plans to revive the two telecom companies. All the three PSUs have been incurring heavy losses in the face of tough competition from private players.