MTNL zooms 117% in December, trades at its highest level since June 2014

Shares of Mahanagar Telephone Nigam Limited (MTNL) continued their upward movement for the fourth straight trading day. The stock was locked at the 10 per cent upper circuit at Rs 38.95 on the BSE on Tuesday, with only buyers seen on the counter.

The stock of state-owned telecom services provider was quoting at its highest level since June 2014, when it hit a high of Rs 39.10. Till 10:21 am; a combined 4.9 million equity shares had changed hands and there were pending buy orders for 4.74 million shares on the NSE and BSE.

Thus far in the month of December, the stock price of MTNL has appreciated by 117 per cent from level of Rs 17.95 on the BSE. In comparison, the S&P BSE Sensex was up 1.28 per cent during the same period.

On sudden spurt in volume, MTNL said that whatever the movement in the price of equity shares of the company is purely due to market conditions and absolutely market driven event and the Management of the company is in no way connected with it. “The company has duly informed the recognized Stock Exchanges i.e. NSE and BSE of all the events, information that have bearing on the operations/performance of the company including price sensitive information,” MTNL said on clarification on movement in price of equity shares of the company.

For the first half (April-September 2021) of the financial year 2021-22 (H1FY22), MTNL had reported a standalone net loss of Rs 1,341 crore against Rs 1,219 crore in H1FY21. MTNL's losses were at Rs 2,454 crore in 2020-21 (FY21) against Rs 3,811 crore in 2019-20 (FY20). The company had posted losses on account of reduction in revenue and increased competition leading to tariff reduction.

Union Cabinet has approved the "Revival plan of Bharat Sanchar Nigam Ltd (BSNL) and MTNL" by reducing employee costs, administrative allotment of spectrum for 4G services, debt restructuring by raising of sovereign guarantee bonds, monetization of assets and in principle approval for merger of BSNL and MTNL. Further, the Company has implemented the Voluntary Retirement Scheme (VRS) in FY 2019-20 resulted into reduction in employees cost.

In FY21 annual report MTNL said that the government has approved the monetization of assets so as to raise resources for retiring debt, servicing of bonds, network up gradation, expansion and meeting the operational fund requirements. As on March 31, 2021, net worth of MTNL was negative to the tune of Rs 16,039.88 crore and debts service as well as interest service coverage ratio is also negative.

The Department of Investment and Public Asset Management (DIPAM) invited bids to sell six assets of state-run telecom firms BSNL and MTNL through its new asset monetisation portal. Both the public sector firms were to identify and monetise assets worth Rs 37,500 crore by 2022, the PTI had reported on November 22, 2021.