MTNL seeks board nod to raise Rs 6,661 cr via govt-backed sovereign bonds

State-run MTNL board meets today to consider and approve the issue of Rs 6,661 crore sovereign bonds as per the cabinet approval with regard to its revival.

The telco has already communicated this to the exchange. MTNL is the telecom service provider in Delhi and Mumbai.

The communication earlier read: “To consider and approve the issue of sovereign guarantee bonds of Rs 6,661 crores as per the cabinet approval in respect to the revival of MTNL subject to the approval of shareholders of the company in AGM if required”.

MTNL board is meeting today to approve Q4 and annual audited results of FY23.

Last July, the Union Cabinet had approved a four-year relief package worth Rs 1.64 lakh crore for the revival of BSNL which included MTNL also since BSNL effectively manages MTNL as well.

As per the package, the government will provide a sovereign guarantee to these PSUs for raising long-term loans. The telecom company is likely to issue bonds maturing in 10 years and will pay a semi-annual coupon, similar to how central government bonds are priced, as per merchant banking sources.

According to an official statement while announcing the revival package last year, for de-stressing BSNL balance sheet, debt structuring has to be undertaken where the government will provide sovereign guarantee to these PSUs (BSNL and MTNL) for raising long term loans. They will be able to raise long term bonds for an amount of Rs 40,399 crore. This will help restructuring existing debt and de-stressing the balance sheets.

The last time MTNL tapped the bond market was in October-December 2020, when it raised an aggregate of around Rs 6500 crooe through two 10-year government-guaranteed bond issuances at a semi-annual coupon of 6.85 per cent and 7.05 per cent.

MTNL reported consolidated net loss of Rs 775.50 crore in Q3 FY23, higher than net loss of Rs 659.28 crore in Q3 FY22.Net sales declined 25.1% to Rs 227.41 crore in Q3 FY23 as against Rs 303.56 crore in Q3 FY22.

The last year’s package that includes a cash support of Rs 43,964 crore and non-cash support of Rs 1.20 lakh crore is aimed at fresh capital infusion for upgrading BSNL services, allocating spectrum, de-stressing its balance sheet and augmenting its fibre network.

It’s a four-year period revival programme and most of it will be implemented in the first two years.

The merger of MTNL with BSNL, however, has been put on the backburner due to the high debt of MTNL.