MTNL to raise Rs 3126 billion through government-guaranteed bond

MTNL revealed its plans to raise Rs 3126 crore through a debt bond that is backed by the government. The company is only awaiting the shareholders' approval. When that happens, MTNL can issue subscription requests for bonds with government guarantees.

Mahanagar Telephone Nigam Limited (MTNL) plans to issue bonds in order to raise Rs 3126 crore. With the use of debt bonds that are backed by the government, the state-run telecom business will raise this money. As a part of the assistance package that the centre had previously stated, this was sent to MTNL. The government provided financial assistance for capex, viability gap funding for rural landlines, financial help to de-stress the balance sheet, merging of BBNL with BSNL, payment of AGR dues, and other things to BSNL and MTNL through the Rs. 1.64 lakh crore revival package.

MTNL revealed its plans to raise Rs 3126 crore through a debt bond that is backed by the government in a regulatory filing on Monday. The company is only awaiting the shareholders' approval. When that happens, MTNL can issue subscription requests for bonds with government guarantees.

According to reports, MTNL's total debt at the end of January 2023 was Rs 28,581 crore. Additionally, according to the budget, the company's net loss for 2023–24 is anticipated to be Rs 2,808 crore.

MTNL stated, "approval of the members be and is hereby accorded to authorize the Board of Directors of the Company to offer or invite or invite subscriptions for Government Guaranteed, Unsecured, Listed, Redeemable Non-Convertible Debentures in the nature of Bonds (NCDs), in one or more series or tranches, aggregating up to Rs 3,126 crore on Private Placement basis."

Earlier this year, there were reports that suggested MTNL closure and subsequent transfer of its operations and personnel to Bharat Sanchar Nigam Ltd. (BSNL) are being considered by the Indian government. This choice signifies the rejection of an earlier scheme to merge the two state-run telecom firms. The decision was made as MTNL battles pressing financial issues, such as rising indebtedness and ongoing losses.

The significant debt load on MTNL’s books would be the main issue motivating this choice. Government representatives expressed scepticism over the viability of revitalising MTNL and thought that combining it with BSNL might cause that company to experience more financial difficulties, impeding the possibilities for both firms’ resuscitation.

Later in September this year, a memorandum of understanding (MoU) was also signed by Mahanagar Telephone Nigam Limited (MTNL) and Bharat Sanchar Nigam Limited (BSNL) in order to streamline operations. Although they are both government-run organisations, their methods of operation and locations vary. It is important to note that BSNL has already taken over management of MTNL’s mobile network services in Mumbai and Delhi. The inked MoU is intended to add synergy to the operations of both companies.