MTNL shares rally 11% on board nod to revival plan

New Delhi: Shares of Mahanagar Telephone Nigam (MTNL) zoomed as much as 11 per cent during the early trade on Friday after the company made a number of announcements following its board meeting.

The board of the beleaguered PSU firm met on August 12 and approved the termination of the depository agreement with Bank of New York Mellon (BNYM) and the delisting of MTNL's American depositary shares listed in New York from 1 October 2022.

Other than this, MTNL's board also approved to issue of sovereign guarantee bonds of Rs 17,571 crore as per the approval by the cabinet for the revival of the debt-ridden PSU firm. Bharat Broadband Network (BBNL) will also be merged with MTNL.

The company gave its nod to raise the borrowing power of the board to Rs 35,000 crore from Rs 30,000 crore earlier. The company provided this entire information in a regulatory filing submitted on Thursday, after market hours.

Following the development, shares of MTNL rallied 11 per cent to Rs 26.45 on Friday, before trading at Rs 26.10 at 9.45 am. The scrip had settled at Rs 23.85 on Thursday.

According to the filing, BSNL will provide all telecom services in Delhi and Mumbai through leasing of operational assets or other appropriate models and MTNL will monetize its land assets to reduce its loan and other liabilities.

Furthermore, the board approved raising sovereign guarantee bonds with a tenure of 10 years or more with a waiver of the guarantee fee to repay the high-cost debt and restructure it with a new sustainable loan.

Shares of MTNL have plunged about 25 per cent in the year 2022 so far, whereas the state-run telecom player is up by 45 per cent in the last one year.

The government will provide budgetary support of Rs 1,600 crore for restructuring and operational integration of Telecom PSU as a one-time grant.