State-owned MTNL has raised Rs 2,500 crore from Axis Bank to pay Rs 6,564 crore to the government towards 3G spectrum.

"We have raised Rs 2,500 crore as short-term loan from Axis Bank and the remaining would be paid from the internal accruals," MTNL Director (Finance) Anita Soni told PTI.

MTNL operates in Delhi and Mumbai and was given 3G spectrum about a year ago on condition that the PSU would be paying as per the final bid in the auction, that ended on May 19.

Delhi and Mumbai were the costliest circles as the bid for Delhi was Rs 3,316.93 crore and that for Mumbai was Rs 3,247.07 crore against the reserve price of Rs 320 crore each for both the metros.

MTNL has already launched 3G mobile services.

MTNL along with BSNL, that operates in rest of India, were given spectrum in advance in view of tendering obligations involved with the PSUs.

The PSU is facing tough times due to stiff competition and lower tariffs. Its loss for the fourth quarter widened as costs rose and revenue from basic and cellular services fell.

The company posted a loss of Rs 1,574 crore for the January-March period, compared with a loss of Rs 73 crore a year earlier. Total sales also fell to Rs 848 crore.

Its costs more than doubled to Rs 3,719 crore because of higher personnel and retirement-benefit expenses.

Last month it got a tax relief of Rs 385 crore and in March it had got another refund of Rs 1,400 crore.