MTNL zooms 9% as govt defers merger with BSNL; stock up 26% so far in April

MTNL shares zoomed 9 per cent to Rs 26.8 per share on the BSE on Thursday after the government deferred the merger of state-run telecom firms BSNL and MTNL due to financial reasons.

At 10:20 AM, shares of the state-run telco was up 8 per cent at Rs 28.2 apiece on the BSE as against a 0.6 per cent fall in the benchmark Sensex index. About 4.9 million shares had changed hands on the NSE and BSE till the time of writing of this report. With today's gains, the shares have climbed 26 per cent so far in April as against a 1.4 per cent gain in the Sensex index.

"Government has approved the revival plan of Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) on October 23, 2019, which inter-alia includes in-principle approval for the merger of MTNL and BSNL. Due to financial reasons including high debt of MTNL, the merger of MTNL with BSNL is deferred," Minister of State for Communications Devusinh Chauhan told the Rajya Sabha on Wednesday.

He also added in his written reply that a proposal for the merger of Bharat Broadband Network Limited (BBNL) and Bharat Sanchar Nigam Limited (BSNL) is under examination.

The merger of BSNL and MTNL, approved by the Union cabinet in October 2019, was a part of the revival package for both the telecom companies as a part of which employees of both the telcos would be given the option of choosing voluntary retirement from the service. The Cabinet had then also approved a revival package of Rs 29,937 crore for the two loss-making telecoms. The revival package includes raising of Rs 15,000 crore sovereign bonds and monetising Rs 38,000 crore of assets in next four years.

Meanwhile, BSNL Chairman and managing director PK Purwar, who also heads MTNL, has submitted before a Parliamentary panel that the Department of Telecom should consider carving out of over Rs 26,500 crore debt of MTNL and its assets under a special purpose vehicle.

He suggested that thereafter operations of MTNL should be merged with BSNL. READ MORE