MTNL posts net loss as wage costs rise

4 Nov 2010

Spiralling wage costs coupled with lower non-operating income impacted the second quarter financial results of state-owned Indian telco Mahanagar Telephone Nigam Ltd (MTNL), with the telco slumping to a net loss. In the three months ended 30 September 2010 MTNL posted a net loss of INR6.05 billion (USD135.7 million) compared to a profit of INR213 million in the same period a year earlier. In its second fiscal quarter the company revealed that staff costs had risen by more than 70% year-on-year to INR7.83 billion, up from INR4.6 billion, with actual payouts for retirement benefits soaring by more than 650%, from INR154 million to INR1.02 billion. Revenue, meanwhile, for the three-month period stood at INR10.95 billion, down 1.9% y-o-y from INR11.16 billion, with turnover from ‘other services’, such as broadband, helping in part to offset some of the declines; revenue from mobile voice, fixed line and wireless in the local loop (WiLL) services were all down against 2Q 2009/10.

In operational terms MTNL’s fixed subscriber base continued to decline, with it reporting a total of 3.47 million basic wireline connections (down from 3.51 million), and 295,275 WiLL connections (310,639) at end-September 2010. Cellular subscriber numbers did increase however, to 8.79 million, up 7.3% against the number a year previously. Broadband subscriber numbers at the end of the quarter were 890,640, up from 735,744 at 30 September 2009.

India, Mahanagar Telephone Nigam Limited (MTNL)