MTNL shares have taken a hike of 15% today, after the government announced a revival plan for the company.
Recently, the plans to revive the Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL), by merging the two entities have been scrapped.
Government Pitches Revival Plan For MTNL?
The state owned telecom firm has been reporting huge losses, but simply a report of revival plan by the government has been enough to boost the shares of the company.
The shares declined from the highs and are currently trading 5.83% higher at ?19.05 on NSE. As per reports, the stock has risen by a good 38.91% in the year-to-date (YTD) period or since the start of 2021.
A package worth nearly ?1.3 trillion ($17.54 billion) has been drafted to revive both the state-run telecom companies MTNL and BSNL. a senior government official has confirmed that the proposed details are to be put forth in the cabinet next month.
The rest of the package would be divided into around Rs. 50,000 crore of spectrum payment dues and 360 billion rupees of pending adjusted gross revenue payments.
Preferred Shares To Be Issued To The Government
As per reports, the official has stated, “The cash component in package would be 250 billion rupees-to-300 billion rupees.” The official has also stated that there would be an issuance of preferential shares to the government.
Prior to this, the Union Cabinet has approved a 4-way revival plan for BSNL to help them to survive, and operate during October 2019.
The said package included Rs 15,000 crore which will be raised through sovereign bonds, and monetization of real estate assets with BSNL, to the tune of Rs 38,000 crore.
At that time, they further decided on the BSNL and MTNL merger to provide telecom services to the metros. As we know that MTNL is a listed company, this merger is expected to be complicated, no doubt.
The plan was to keep MTNL as a subsidiary of BSNL and continue to operate independently till the time this merger is complete.
By March 31, 2021, the total debt owed by the company stands at 256.51 billion rupees ($3.46 billion).
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