Mahanagar Telephone Nigam Ltd Management Discussions

This section shall include discussion on the following matters within the limits set by the Listed Entitys competitive position:

a. Industry Structure and Developments

The Telecom industry in India is witnessing a strong growth phase and is expected to remain one of the fastest-growing sectors of the economy over the next few years. With a subscriber base of over one billion users, India is the second-largest telecom market in the world. The industry is projected to grow steadily, driven by increasing data consumption, expansion of digital services, and rising smartphone penetration. Government initiatives such as Digital India and policy reforms are further supporting the sectors expansion and attracting investments. One of the key drivers of growth is the rapid rollout and adoption of 5G technology. Telecom operators are investing heavily in network infrastructure to provide faster and more reliable connectivity. This is expected to unlock new opportunities in areas such as smart cities, Internet of Things (IoT), Artificial Intelligence, and Industrial Automation. Alongside this, the demand for high-speed internet continues to surge due to the widespread use of OTT platforms, online education, digital payments, and remote working. The industry structure in India has evolved into an oligopolistic market dominated by a few major players, leading to improved pricing discipline and gradual increase in average revenue per user (ARPU). Tariff hikes in recent years have helped telecom companies improve their financial health after a prolonged period of intense price competition. Additionally, new growth avenues such as fixed wireless access, satellite communication, and enterprise solutions are expected to contribute significantly to future revenues. However, the sector continues to face several challenges. High capital expenditure requirements for spectrum acquisition and network expansion, coupled with significant debt levels, remain major concerns. Competition from over-the-top (OTT) platforms has reduced traditional voice and messaging revenues. Regulatory issues, including adjusted gross revenue (AGR) liabilities and spectrum pricing, also pose risks to the industrys stability. Overall, the outlook for the telecom industry in India remains positive. The sector is transitioning from being a basic connectivity provider to a key enabler of the digital economy. With continued technological advancements, supportive government policies, and increasing demand for data services, the Indian telecom industry is well-positioned for sustained growth in the coming years.

b. Opportunities and Threats

The Indian Telecom industry exemplifies an Oligopoly Market structure, dominated by a few key players such as Reliance Jio, Bharti Airtel, Vodafone Idea and BSNL. The market dynamics are characterized by high barriers to entry, interdependence among firms, and intense competition. While the oligopolistic nature of the market has led to lower prices, improved services, and innovative offerings for consumers, it also presents challenges such as limited choices and potential market concentration. MTNL and BSNL have entered into a SERVICES AGREEMENT on 22.11.2024 under which BSNL has been entrusted with the responsibility to undertake the maintenance and operational activities of MTNLs Telecom Services. This mutually binding

Agreement has come into effect from 01.01.2025 between MTNL and BSNL and shall remain valid for a period of Ten (10) years unless it is revoked earlier by giving a notice of Six (06) months or extended by mutual consent between MTNL and BSNL.

c. Segment-wise or Product-wise Performance

MTNL operates its Telecom Services in broadly three heads:

1. Basic & Other services

2. Cellular

3. Infrastructure Leasing

Segment wise Performance of MTNL for the Financial Year 2025-26 as compared to FY 2024-25:

( Rs.In Crore)

Sl. No.	Particulars	FY 2025-26	FY 2024-25
1.	Basic & Other services	364.37	616.18
2.	Cellular	16.91	13.91
3.	Infrastructure Leasing	507.14	431.59
	Less: Inter Segment Revenue	1.14	1.14
	Total Revenue from Operations	887.27	1060.54

d. Outlook

MTNL and BSNL have entered into a SERVICES AGREEMENT on 22.11.2024 under which BSNL has been entrusted with the responsibility to undertake the maintenance and operational activities of MTNLs Telecom Services. This mutually binding Agreement has come into effect from 01.01.2025 between MTNL and BSNL and shall remain valid for a period of Ten (10) years unless it is revoked earlier by giving a notice of Six (06) months or extended by mutual consent between MTNL and BSNL. In pursuance of this agreement creation of Delhi Business Area, BSNL in telecom operational area of MTNL Delhi and Mumbai Business Area, BSNL in the telecom operational area of MTNL Mumbai has been notified by BSNL. Launching 4G Services in Delhi and Mumbai: Department of Telecommunications (DoT) vide Office Memorandum No.30-04/2019-PSU affairs dated 29.10.2019 had informed that Government of India (GoI) in its Cabinet meeting held on 23.10.2019 has approved the proposal of administrative allotment of spectrum to BSNL and MTNL for providing 4G services among other things. In a modification to this decision, the Group of Ministers (GoM) constituted on the matter of Revival of BSNL and MTNL approved allocation of 4G spectrum to BSNL in Delhi and Mumbai in place of MTNL in its meeting held on dated 21.12.2020. Accordingly, Mobile 4G network is under process of installation & rollout in Delhi and Mumbai by BSNL. Further, towards implementation of the SLA, certain customers in Delhi & Mumbai have been migrated to BSNL w.e.f. 01.04.2025 and Billing and Collection is done by BSNL for such Customers. The Revenue Share of MTNL arising from such Customers has

been approved and agreed by both Companies. Revenue Share against the migrated Customers to BSNL, amounting to Rs. 156.51 crore (Delhi Unit Rs 69.84 crore & Mumbai Unit Rs 86.67 crore), has been recognised by MTNL during the year under review.

e. Risks and Concerns

Enterprise Risk Management (ERM) Policy is established by MTNL to Identify, Monitor, Mitigate and Minimize the risk and concerns that may impact the Organisation. Details of Risk identified and its Minimization & Mitigation Plan for FY 2025-26 are given as Annexure to this Report.

f. Internal Control Systems and their adequacy

Except for the effects / possible effects of the material weaknesses described by the Statutory Auditors in its Report on the Internal Financial Control under Section 143(3)(i) of the Companies Act, 2013 for the FY 2025-26 which is attached as annexure to the Independent Auditors Report which is part of the report on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, adequate internal financial controls with reference to the Standalone financial statements and such internal financial controls with reference to the Standalone financial statements were operating effectively as of March 31st, 2026, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

g. Discussion on Financial Performance with respect to Operational Performance

Details in respect of the above items are already covered in the Directors Report.

h. Material developments in Human Resources / Industrial Relations front, including number of people employed

Details in respect of the above items are already covered in the Directors Report.

i. Details of Significant Changes (i.e. Change of 25% or more as compared to the immediately previous Financial Year) in key financial ratios, along with detailed explanations therefor, including:

The following are the key financial ratios as on 31.03.2026 and also compared to the previous two years i.e. FY 2024-25 & 2023-24 respectively:

Some of the Parameters have changed beyond 25% due to continued losses and reduction of income.

S. No.	Particulars	Year Ended 31.03.2026 AUDITED	Year Ended 31.03.2025 AUDITED	Year Ended 31.03.2024 AUDITED
A	Debt Service Coverage Ratio (in times) [EBITDA / (Finance Cost + Lease Liabilities Payments + Principal Repayment of Long-Term Debt)]	0.15	0.06	0.01
B	Interest Service Coverage Ratio (in times) [EBITDA / Finance Cost]	0.15	0.07	0.02
C	Net Worth (in Rs Cr) (As per Section 2 (57) of Companies Act 2013)	(29,974.84)	(26935.64)	(23662.80)
D	Net Profit/ (Loss) After Tax (in Rs Cr)	(3,102.94)	(3323.51)	(3302.19)
E	Earnings Per Share (in Rs) [Not Annualised]	(49.25)	(52.75)	(52.42)
F	Current Ratio (in times) [Current Assets / Current Liabilities]	0.34	0.41	0.54
G	Debt-Equity Ratio (in times) [Long Term Borrowings including Current Maturities + Short Term Borrowings) /Total Equity]	(1.18)	(1.20)	(1.27)
H	Long Term Debt to Working Capital (in times) Long Term Debt excluding lease liability + Current Maturities of Long-Term Debt Working Capital excluding current maturities of Long-Term Borrowings	(3.50)	(4.61)	(9.72)
I	Bad Debts to Account Receivable Ratio (in times) [Bad Debts/Average Trade Receivables]	0.02	0.02	0.02
J	Current Liability Ratio (in times) [Current Liabilities/Total Liabilities]	0.40	0.35	0.28
K	Total Debts to Total Assets (in times) [Long Term Borrowings + Short Term Borrowings + Lease Liabilities) /Total Assets]	3.53	3.19	2.82
L	Debtors Turnover Ratio - Annualised (in times) [Revenue from Operations / Average Trade Receivables]	2.09	1.21	1.36
M	Paid up Debt Capital (Outstanding Debt) (in Rs. Crs)	26,226.85	25628.09	25,794.96
N	Operating Margin (%) [EBIT - Other Income)/ Revenue from Operations]	(79.07)%	(172.28)%	(162.73)%
O	Net profit Margin (%) [Profit after Tax / Revenue from Operations]	(349.72)%	(528.42)%	(453.31)%

1. Details of any change in Return on Net Worth as Compared to the Previous Financial Year along with a detailed explained thereof.

In last few years the Net Worth of MTNL is Negative. Therefore, there is no change in return on Net Worth as Compared to the Previous Financial Year.

Cautionary Statement

Certain statements made in the Management Discussion and Analysis Report relating to the Companys objectives, projections, outlook, expectations, estimates, and others may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations, whether expressed or implied. Several factors could make a significant difference to our operations.

FOR & BEHALF OF BOARD OF DIRECTORS

(A. Robert J. Ravi) Chairman & Managing Director