 "Mahanagar Telephone Nigam, MTNL")
The latest incident is the second in a week for the telco. The government on Wednesday stepped in to pay MTNL bondholders the guaranteed semi-annual interest.
State-owned telecom operator MTNL has defaulted on a Rs 37.5 crore loan repayment owed to Punjab & Sind Bank, it informed the exchanges on Friday. The financially beleaguered telco stated it has defaulted on the repayment of the latest instalment of the principal loan amount on July 10.
The total unpaid principal amount stands at Rs 5480.2 crore, MTNL said. Meanwhile, MTNL had total outstanding borrowings from banks and financial institutions to the tune of Rs 7780.2 crore, it told the exchanges. The company’s total indebtedness stood at Rs 31,851.2 crore.
On Thursday, telecom minister Jyotiraditya Scindia said the Department of Telecommunications (DoT) is closely monitoring MTNL.
The latest incident is the second in a week for the telco. The government on Wednesday stepped in to pay MTNL bondholders the guaranteed semi-annual interest.
In July 2023, MTNL raised Rs 2480 crore ($296.97 million) through 10-year sovereign-guaranteed bonds at a semi-annual coupon rate of 7.59 per cent. While the latest interest payment is due on July 20, MTNL had last week informed the exchanges it is unable to make interest payments due to insufficient funds.
The tripartite agreement (TPA) signed for this purpose among MTNL, DoT, and Beacon Trusteeship Ltd, which is the debenture trustee, mandates that MTNL has to fund the semi-annual interest into the escrow account with adequate funds 10 days before the due dates.
With this date having been passed, the government had to step in and deposit the necessary funds in the designated trust and retention account at least three days before the due date, which was July 17, Wednesday.
Interestingly, MTNL’s share price rose to an all-time high of Rs 64.08 on Thursday after this happened. The share price rose nearly 10 per cent to Rs 70.48 on Friday, at the time of writing this report.
Set up in 1986, the public sector undertaking (PSU) under the Ministry of Communications was tasked with providing telephone services in the Delhi and Mumbai circles. The company had stayed profitable till 2008-09. Since then, it made losses every year barring 2013-14.
The government had, in October 2019, approved a Rs 68,751-crore revival package for loss-making telecom sector PSUs BSNL and MTNL. The package envisaged merging the entities and raising funds via the issuance of sovereign-backed bonds. But MTNL’s huge debt, pegged at Rs 23,500 crore in FY23, has held up the merger with its relatively stable sister firm BSNL.
DoT officials have said MTNL won’t be shut down, but its operations will be shifted to BSNL, a process that has already begun.
First Published: Jul 19 2024 | 3:25 PM IST
