INSUBCONTINENT EXCLUSIVE:
Shares of Mahanagar Telephone Nigam (MTNL) hit the upper circuit limit on Thursday after the government on Wednesday approved a Rs 69,000
crore revival package for BSNL and MTNL, including a proposal to merge the two loss-making firms, monetise assets and give VRS to employees
to turn the combined entity profitable in two years.
The scrip jumped 4.92 per cent to Rs 6.19 in the morning trade, while BSE benchmark
Sensex rose 142.73 points, or 0.37 per cent, at 39,201
BSNL is not listed on the bourses.
The package approved includes infusion of Rs 20,140 crore capital for purchase of 4G spectrum, Rs 3,674
crore for GST to be paid on spectrum allocation, companies raising Rs 15,000 crore in debt on sovereign guarantee, government funding of Rs
17,160 crore for a voluntary retirement scheme (VRS) and another Rs 12,768 crore towards retirement liability.
Proceeds of the sovereign
bonds issue will be used to restructure debt and meet other expenses.
The bond will have to be serviced by the PSUs only
The main liability will fall on BSNL, as MTNL will now operate as a subsidiary company
The two firms will monetise assets worth Rs 37,500 crore in next three years.
MTNL has reported losses for nine out of 10 years
BSNL, too, has been ringing in losses since 2010.
The total debt on the books of both the companies stood at Rs 40,000 crore, of which half
the liability is of MTNL, which operates in Delhi and Mumbai.
Both the companies have been demanding spectrum to start 4G services and stay
competitive in the market.
The government held 56.89 per cent stake in MTNL as of September 30, 2019
Foreign institutional investors and LIC hold 0.33 per cent and 13.62 per cent stake and individual investors, including HNIs, hold nearly 21