MTNL's Financial Crisis: A Sovereign Guarantee in Action

State-owned telecom firm MTNL has defaulted on Rs 5,726.29 crore in payments to various banks, with a total debt of Rs 32,097.28 crore. Union Telecom Minister assured its debts are secure due to a sovereign guarantee, and MTNL's business will be transferred to BSNL.

State-owned telecom company MTNL has defaulted on payments totaling Rs 5,726.29 crore, according to a regulatory filing. The amount includes Rs 5,492 crore as principal and Rs 234.28 crore as interest owed to various banks.

The company's financial debt now stands at a staggering Rs 32,097.28 crore, which is 40 times its consolidated annual income of Rs 798 crore. Despite the financial strain, Union Telecom Minister Jyotiraditya Scindia reassured stakeholders that the debt carries no insecurity as it is protected by a sovereign guarantee. He confirmed that MTNL's operations will be absorbed by BSNL.

Among the most exposed creditors is Union Bank of India, owed Rs 3,480.85 crore by MTNL. Bank of India's exposure amounts to Rs 1,039.77 crore. Other affected banks include Punjab National Bank, State Bank of India, and UCO Bank, with the latter owed Rs 255.42 crore. MTNL's payment default also extends to Rs 173.13 crore owed to Punjab and Sind Bank.

(With inputs from agencies.)