 "MTNL shares dip 3% as company struggles to fund escrow account")
Mahanagar Telephone Nigam (MTNL) shares dropped 2.8 per cent in Monday's trade on BSE, logging an intraday low at Rs 43.85 per share. The stock slipped after the company informed that it was unable to fund the escrow account due to insufficient funds. An escrow account is a secure account that holds funds or assets until certain conditions are met. The funds are then released to the beneficiary or recipient.
Around 12:33 AM, MTNL share price was down 2.57 per cent at Rs 43.99 per share on BSE. In comparison, the BSE Sensex was down 0.82 per cent at 76,741.77. The market capitalisation of the company stood at Rs 2,771.37 crore. The 52-week high of the stock was at Rs 101.88 per share and the 52-week low was at Rs 31.24 per share.
As per the structured payment mechanism of Tri-Partite Agreement (TPA) signed among MTNL, Department of Telecommunications (DoT), the Ministry of Communications, the Government of India, and Beacon Trusteeship Limited, MTNL has to fund the Semi-Annual Interest into the ESCROW Account with an adequate amount 10 days before the due date, the filing read.
However, it stated that in case of any defaults, sovereign guarantee will be invoked by the debenture trustee, and the Govt of India is obliged to make the payment to MTNL for the interest or the principal amount.
The loss-making telecom company MTNL reported a net loss of Rs 890.3 crore for the second quarter ending September 30, 2023. This compares to a net loss of Rs 773.5 crore in the previous quarter (April-June).
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During the second quarter, the company's total revenue declined by 5.3 per cent, reaching Rs 174.2 crore, down from Rs 183.9 crore in the same period last year. At the operating level, the Ebitda loss stood at Rs 119.3 crore for the quarter, compared to a loss of Rs 110.9 crore in the preceding June quarter.
MTNL is a state-owned telecommunications company in India, offering a range of services such as landline telephony, mobile communications, broadband internet, and data services. It is primarily focused on providing telecommunication services in Mumbai and Delhi, two of India's largest metropolitan areas. MTNL was initially set up to provide high-quality telephone services in urban areas, especially in regions that had limited access to telecommunication infrastructure.
In the past one year, MTNL shares have ganied 30.15 per cent against Sensex's rise of 6.6 per cent.