Shares of Mahanagar Telephone Nigam Limited (MTNL) surged by 20% to hit the upper circuit, reaching a multi-year high of Rs 64.08 on the NSE. This significant increase follows the government’s deposit of Rs 92 crore to cover the immediate bond interest dues for the state-owned telecom company.
On July 11, MTNL announced it lacked sufficient funds to make a scheduled interest payment on its Series VIII-A bonds. The payment was due on July 20, and MTNL was required to fund the designated trust account 10 days before the due date.
As of July 15, Bloomberg reported that MTNL was struggling to meet its debt obligations for the week. The company has local bonds worth Rs 4,810 crore to service for the rest of 2024. MTNL missed interest payments on its 7.59% July 2033 bonds, guaranteed by the government, with payments on 14 bonds due between July and December this year.
Reports then indicated that the Union Government would cover all interest payments for MTNL’s bonds under the sovereign guarantees provided. Sources told CNBC-TV18 that while the government will meet these obligations, there are no plans to offer direct financial aid to MTNL.
Additionally, there have been rumors that the government might transfer MTNL operations to Bharat Sanchar Nigam Limited (BSNL). In response, MTNL stated that it has not confirmed any such plans and no concrete decision has been made.
This year, MTNL’s stock has risen by 91%, almost doubling the investment value for its shareholders.
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Source: Moneycontrol
