This PSU telecom stock has zoomed 110% in 2 weeks; hits over 14-year high

MTNL share price was locked in the 5% upper circuit at Rs 88.06, MTNL stock is quoting at its highest level since January 2010

MTNL share price update: Shares of Mahanagar Telephone Nigam Limited (MTNL) hit an over 14-year high of Rs 88.06, gaining 5 per cent on the BSE in Wednesday's intraday trade. The market price of state-owned telecom - cellular & fixed line - services provider was trading at its highest level since January 2010. MTNL stock had hit a record high of Rs 390 on February 14, 2000.

Till 01:51 PM, a combined 8.84 million shares had changed hands and there were pending buy orders for 7.59 million shares on the NSE and BSE. In comparison, the BSE Sensex was down 0.6 per cent at 79,957.

 

MTNL share price was also locked in the upper circuit for a third straight day. It is trading higher for the ninth straight session. MTNL share price has more-than-doubled since July 10, zooming 110 per cent during the period.

Following the sharp surge, the exchanges have revised the circuit limit of MTNL stock from 10 per cent to 5 per cent with effect from today, July 24 Earlier, on July 19, it had revised the circuit limit from 20 per cent to 10 per cent.

Set up in 1986, the PSU under the Ministry of Communications has been tasked with providing telephone services in Delhi and Mumbai circles. The company had stayed profitable till 2008-09. Since then, however, it made losses every year, barring 2013-14.

In the past six trading days, MTNL share price has surged 80 per cent after the government deposited Rs 92 crore to clear immediate bond interest dues of state-owned telecom services provider.

The move came after MTNL disclosed to the exchanges on July 11, 2024, that it could not fund the escrow account for the payment of semi-annual interest on the series VIII-A bonds, as per the structured payment mechanism for the bonds, due to insufficient funds.

The payment of semi-annual interest on series VIII-A bonds is due on July 20, 2024 and as per the structured payment mechanism, the designated trust and retention account is to be funded by MTNL 10 calendar days i.e. (T-10th day) prior to the due date, to the tune of the interest and/or principal obligations on the bonds.

Later, MTNL, on July 17, informed that the funding of designated escrow account for payment of 2nd Semi Annual Interest w.r.t. 7.59 per cent MTNL Bond Series VIII-A (INE 153A08154) which is due on July 20, 2024 has been done on 17.07.2024. CLICK HERE FOR STATEMENT

Last week, Telecom Minister Jyotiraditya Scindia said that the Department of Telecommunications (DoT) was closely monitoring MTNL. DoT officials have said MTNL won't be shut down, but its operations will be shifted to BSNL, a process that has already begun.

BSNL link

Earlier, it was being reported that the buying at the counter was on reports that the government was considering the option of handing over operations of the telecom company to Bharat Sanchar Nigam Limited (BSNL).

However, MTNL, on July 16, clarified that there is no such circulated information for the general consumption/information of MTNL except that deliberations through Committee of Secretaries meetings are being held at the highest level of DoT and other Govt. Ministries for various options on way forward in case of MTNL and for further action for formal approvals of Government thereto.

Therefore, no such specific decision or information is available at this point of time. As such there is no such circulated / written information that can be disclosed under Regulation 30 of the SEBI (LODR) Regulations, 2015 with MTNL, the company said.

MTNL, a public sector enterprise, is engaged in providing telecom services in the geographical area of Mumbai and Delhi. MTNL is one of the two state-owned telecom service providers in India, alongside BSNL. The Government of India (GoI) holds a majority stake in MTNL (56.25 per cent as on March 31, 2024), and the balance is held by the public.

MTNL enjoys a 'Navratna Status' that gives greater autonomy to central public sector enterprises (CPSEs) in their investment and capital expenditure (capex) decisions. Such a status also aims at facilitating expansion of its operations, in domestic and global markets.

In October 2019, keeping in mind the legacy and the strategic importance of MTNL, the GoI announced a revival plan for MTNL and BSNL and continued to support the company’s funding requirements through issuance of the LoC. To make the public sector units (PSUs) financially viable, the Union Cabinet approved the second revival plan for BSNL and MTNL (the telcos) amounting to Rs 1.64 trillion on July 27, 2022. The revival plan is aimed at upgrading services, rolling out 4G services, augmenting the telecom network, and de-stressing balance sheets.

As BSNL is handling MTNL’s operations, fund infusion per revival package has taken place in BSNL, which is managing combined capex for the telcos. The progress on the monetisation of certain identified land assets of MTNL has also been slow, which has since been transferred from the Department of Investment and Public Asset Management (DIPAM) to the Department of Public Enterprise (DPE), according to CARE Ratings.