MTNL surges 10% as BSNL gets ₹6,000cr for 4G expansion
What's the story
Shares of Mahanagar Telephone Nigam Limited (MTNL) surged by a whopping 10.3% in early trading today.
The spike came after the Union Cabinet approved an additional ₹6,000 crore funding to Bharat Sanchar Nigam Limited (BSNL) to boost its 4G expansion.
The financial injection will help address a shortfall in the planned capital expenditure for BSNL and its subsidiary, MTNL.
Market response
Cabinet approval boosts MTNL's market performance
After the Cabinet's decision, MTNL shares hit a day's high of ₹57.56 on the BSE. In the last one month, the PSU stock has gained over 20%.
The proposal for additional funding was approved at a Cabinet meeting on February 7.
This move will go a long way in helping BSNL and MTNL expand and improve their services across India, especially in Delhi and Mumbai where MTNL operates under BSNL's management.
Service expansion
BSNL's customer base and future plans
BSNL has been losing customers due to lack of pan-India 4G services.
However, it did gain customers for three-four months after private telcos hiked their tariffs in July last year.
The state-run giant hopes that the launch of nationwide 4G services would help put an end to this.
Notably, BSNL is also gearing up to launch 5G services at select locations soon.
Financial breakdown
BSNL's 4G site expansion and funding details
In 2023, BSNL had announced an advance purchase order of ₹19,000 crore for 100,000 4G sites.
However, the actual purchase order for network equipment from Tata Consultancy Services and state-run telecom equipment maker ITI was about ₹13,000 crore.
The recently approved additional ₹6,000 crore will provide the balance funding needed.
So far, BSNL has successfully rolled out 65,000 of these planned 4G sites across India.
Revival packages
Government's significant investment in BSNL and MTNL
Since 2019, the government has pumped around ₹3.22 lakh crore into BSNL and MTNL through three revival packages. These investments have included money for 4G rollout.
Due to these packages, both BSNL and MTNL started making operating profits from FY 2020-21 onwards.
The government had also asked BSNL to launch 4G based on a locally developed stack by CDoT-TCS combine, despite opposition from top executives within the company who favored equipment from global vendors.