Financial Performance
Mahanagar Telephone Nigam Limited (MTNL) reported a standalone net loss of ₹3,102.94 crore for FY 2025-26, showing a marginal improvement from the previous year's loss of ₹3,323.51 crore. Total income stood at ₹1,468.81 crore, comprising operational revenue of ₹887.27 crore and other income of ₹581.54 crore (including ₹410.95 crore from asset monetization). The company's net worth remains fully eroded at negative ₹29,974.84 crore with accumulated losses, while total borrowings reached ₹35,425.27 crore, including ₹9,262.53 crore in defaulted bank loans classified as NPAs.
Operational Restructuring with BSNL
MTNL executed a comprehensive service agreement with Bharat Sanchar Nigam Limited (BSNL) effective January 1, 2025, transferring operational management of Delhi and Mumbai telecom circles to BSNL for a 10-year term. Under this arrangement, BSNL handles CAPEX investments and operational expenses while MTNL recognized ₹156.51 crore as revenue share from migrated customers. Customer migration for landline, broadband, FTTH, and leased line services commenced, with billing and collection responsibilities transferred to BSNL from April 2025.
Debt Resolution and Government Support
The company faces severe liquidity constraints with all loan accounts declared NPAs and current accounts frozen by lender banks. An escrow arrangement with Union Bank of India remains extended until August 4, 2026, with the Government of India funding bond interest/principal payments through sovereign guarantees totaling ₹24,071 crore. Additional government support includes a ₹2,980.92 crore interest-free loan for bond payments and sovereign guarantee bonds of ₹17,571 crore approved with waiver of guarantee fees.
Asset Monetization Initiatives
MTNL realized ₹419.15 crore through asset monetization in FY26, including sale of residential properties to NABARD (₹350.72 crore) and Bihar Government (₹68.43 crore). The company has identified 16 additional properties for monetization in FY27 through direct sales/transfers to government departments and auction processes. Rental income contributed ₹507.14 crore to overall revenue.
Audit Qualifications and Material Weaknesses
Statutory auditors issued an adverse opinion citing 20 material uncertainties, including: improper revenue recognition under the BSNL service agreement; unreconciled balances with BSNL (₹4,101.34 crore net receivable) and DoT (₹429.60 crore net payable); non-provision of penal guarantee fees of ₹352.30 crore; default on ₹9,262.53 crore bank borrowings; and title issues with immovable properties. The Comptroller and Auditor General additionally highlighted deficient disclosure of contingent liabilities and incorrect financial ratio calculations.
Contingent Liabilities and Litigations
Total contingent liabilities amount to ₹15,734.04 crore, including: ₹5,370.09 crore in DoT license fee demands; ₹3,205.71 crore in One Time Spectrum Charges; ₹1,155 crore for additional spectrum charges; and various legal disputes including Canara Bank arbitration (₹472.60 crore), M&N Publications contract (₹77.06 crore), and UASL operator refund case (₹96.71 crore).
Subsidiary Performance and AGM Details
MTNL's subsidiaries showed mixed performance: Mahanagar Telephone (Mauritius) Ltd reported a loss of ₹5.64 crore; Millennium Telecom Ltd posted a profit of ₹0.74 crore and recommended dividend; while MTNLSTPI IT Services Ltd recorded a profit of ₹2.84 crore. The company will hold its 40th Annual General Meeting on September 30, 2026, to adopt financial statements and appoint government nominee directors Shyamal Misra and K Balaji.
Going Concern Assessment
Despite continuous losses since 2009-10 and fully eroded net worth, management maintains going concern assumption based on government support measures including sovereign guarantee bonds, asset monetization initiatives, soft loans, and the Committee of Secretaries examining potential merger with BSNL. The operational takeover by BSNL is expected to ensure EBITDA-neutral operations going forward.