Modi government mulls ₹8,000cr infusion to revive debt-ridden MTNL: Report
What's the story
The Indian government is mulling a financial revival plan for Mahanagar Telephone Nigam Ltd (MTNL), as per CNBC-TV18.
The telecom service provider, which is currently in debt of ₹31,944.51 crore, will not be allowed to shut shop or approach the National Company Law Tribunal (NCLT).
The government thinks such a move could hurt public sector undertaking (PSU) stocks, and would rather keep MTNL running. The proposed revival plan for MTNL includes an infusion of nearly ₹8,000 crore.
Worrying
MTNL recently defaulted on its bank loans
A committee of Secretaries is reviewing the revival strategy. Notably, MTNL recently defaulted on its bank loans, with its account being classified as a non-performing asset (NPA) by several lenders including the State Bank of India (SBI), Union Bank of India, and Bank of India.
Debt details
SBI's exposure and demand for immediate payment
As of September 30, 2024, SBI's total outstanding exposure to MTNL stood at ₹325.52 crore, of which ₹281.62 crore was overdue. The bank has sought immediate payment of the same to regularize the account.
Amid this financial pressure, MTNL's stocks soared and are currently trading 5.2% higher at ₹53.59 per share, despite having halved from their recent peak of ₹101 per share earlier this year.
Asset utilization
SBI seeks details of MTNL's land monetization plan
SBI is also looking into MTNL's land monetization plan, and whether the proceeds from a major project with NBCC will be used to clear pending loans.
Earlier this year, there were signs that the Centre may consider shifting MTNL's operations to BSNL, a bigger PSU telecom player.
However, reports say the government isn't keen on fully supporting MTNL's revival but will meet existing obligations on interest on Sovereign Guarantee Bonds.