MTNL Defaults on ₹8,585 Crore Loan to 7 PSU Banks as Debt Soars Beyond ₹34,000 Crore

In yet another sign of India's troubled telecom legacy sector, state-run Mahanagar Telephone Nigam Ltd. (MTNL) has officially defaulted on ₹8,585 crore worth of loans to seven major public sector banks, failing to repay both principal and interest, according to its regulatory filing to stock exchanges.

The banks impacted by this massive default include Union Bank of India (₹3,733.22 crore), Bank of India (₹1,121.09 crore), Indian Overseas Bank (₹2,434.13 crore), Punjab National Bank (₹474.66 crore), State Bank of India (₹363.43 crore), UCO Bank (₹273.58 crore), and Punjab and Sind Bank (₹184.82 crore). MTNL’s filing notes that these defaults occurred between August 2024 and February 2025.

MTNL’s total debt obligations have now ballooned to a staggering ₹34,484 crore as of June 30, 2025. This includes ₹24,071 crore in sovereign guarantee (SG) bonds and an additional ₹1,828 crore loan to pay SG bond interest. The company has been loss-making for years, weighed down by legacy costs, declining revenues, and mounting competition from private players.

To manage its severe financial stress, MTNL has been selling non-core assets such as land parcels, buildings, telecom towers, and fiber networks. As per its disclosures, MTNL owns 41 land and building parcels in Delhi, with about 14 lying vacant. In 2024, NBCC (India) Limited developed a 13.88-acre land parcel belonging to MTNL in an attempt to monetise its real estate assets.

Meanwhile, the Centre has approved a non-auction route for monetising assets below ₹10 crore for PSUs like BSNL and MTNL, while assets valued above ₹100 crore will be overseen by the National Land Monetisation Corporation (NLMC).

MTNL's stock performance reflects its grim situation: it was trading at ₹50.49 on the BSE at the time of filing this report, having fallen to a day's low of ₹49.38. Over the past year, its stock has delivered a negative return of -5.51% to investors, underlining persistent concerns over its viability.

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