New Delhi: The Central government has appointed Mahmood Ahmed, Deputy Director-General of the Licensing Finance Assessment (LFA), Department of Telecom as its nominee director on the board of MTNL, a PSU under the ministry.
He has been appointed for a three-year period or till the period of superannuation, an official order said.
As part of the revival package announced by the Union Cabinet in October last year, MTNL will be merged with the BSNL. Pending this, MTNL will act as a subsidiary of BSNL. MTNL is listed but has its net worth already eroded. BSNL is unlisted.
In November last year, MTNL received DoT approval to be a subsidiary of BSNL by transferring the government's shareholding to it following the Union Cabinet's in-principle approval to their merger earlier.
In the next fiscal the merger of BSNL and MTNL will take effect with formal notification after structural changes take place in MTNL to merge with BSNL.
The government holds 56.25 per cent in MTNL. Its share price was up after a long time, 4.55 per cent at Rs 8.05.
MTNL currently has a lean structure after the VRS where 14,000 employees took voluntary retirement. It has reported losses in nine of the past 10 years and BSNL too has been ringing in a loss since 2010. The total debt on both the companies is Rs 40,000 crore, of which half of the liability is on MTNL alone.
The next fiscal Budget provides MTNL financial support of Rs 372 crore on account of minimum alternate tax, a refund of CDMA spectrum, payment of interest on MTNL Bonds and fiber-to-the-home (FTTH) service. The Central government will infuse Rs 6,295 crore in MTNL for 4G spectrum. Besides, Rs 1,133 crore will be provided to MTNL as grant-in-aid for payment of GST.