The share price of Mahanagar Telephone Nigam Ltd (MTNL) today took a beating on reports that Union telecommunications minister Pramod Mahajan was averse to the idea of granting an international long distance (ILD) licence to the basic telephony services provider and on news that the government had postponed the divestment in the company.
The stock of the fixed line and cell phone services provider plunged to an intra-day low of Rs 110.40 and ended at Rs 109.55, down by almost six per cent from its previous close.
India's largest listed telecom services provider registered a traded volume of over 7.30 lakh shares on the Bombay Stock Exchange and 14.41 lakh shares on the National Stock Exchange.
MTNL was one company which was considered to be on the fast track towards disinvestment. Earlier, the ministry of disinvestment had said that the selloff process in MTNL would take place soon after that of the Videsh Sanchar Nigam Ltd (VSNL).
Analysts say MTNL's financial performance has been uninspiring and the only trigger for the company's stock was on expectations of its privatisation.
According to reports, the telecom minister is keen to assess the performance of other new private players in the ILD business before considering granting ILD licences to MTNL and Bharat Sanchar Nigam Ltd (BSNL).
Besides, Mahajan also is keen to stick to the agreement with VSNL, that the latter would be the preferred carrier for a brief time after its divestment.
According to the agreement, there are still 18 months to go before VSNL loses its status of the preferred carrier.
Between September 3 and 6, 2002, MTNL edged up 2.8 per cent to RS 117.40 from Rs 114.20 on reports that the Centre may grant an ILD licence to BSNL and MTNL.
Currently, MTNL pays VSNL for all calls carried on the international telephony major's network. For the first quarter ended June 30, 2002, MTNL registered flat sales of Rs 1,493.65 crore and a 34 per cent fall in net profit to Rs 249.87 crore. Increase in tax outgo due to the exhaustion of the five-year tax-holiday period also affected the bottomline for the quarter.
The government's holding in MTNL stands at 56.25 per cent, while institutions and the public hold 40 per cent and 2 per cent, respectively.
