State-run telecom company Mahanagar Telephone Nigam Limited has been declared as a sick central public sector enterprises (CPSEs) by the government. This has been attributed to the obsolete plants and machinery, heavy interest burden, resource crunch, surplus manpower and shortage of working capital.

A CPSE is declared sick after it has accumulated losses in any financial year equal to 50 per cent or more of its average net worth during four preceding years. Although MTNL had posted a profit of Rs 78.21 billion in 2013-14, it was mainly due to exceptional items or write back of provisions on account of pension liabilities and spectrum amortisation costs of Rs 116.21 billion. Last year, the government approved a refund of Rs 45.33 billion to MTNL against surrendering of broadband spectrum, for which it was to pay the same amount in 2010. Prior to this, the company had reported a loss of Rs 53.21 billion in 2012-13.