MTNL Misses Payment To Bondholders For The Second Time
The semi-annual interest payment of 7.51% MTNL Bond Series VIII-D was to be credited in an escrow account.
Government-run Mahanagar Telephone Nigam Ltd. on Tuesday said that it is unable to pay semi-annual interest to its bond holders for the second time due to lack of funds. As per a tripartite agreement signed with the Department of Telecommunication, Ministry of Communications and Beacon Trusteeship Ltd., dues had to be paid 10 days before the due date of Sept. 6.
The semi-annual interest payment of 7.51% MTNL Bond Series VIII-D was to be credited in an escrow account, according to an exchange filing.
This is the second time the company failed to pay semi-annual interest to bondholders due to lack of sufficient funds. It had failed to make the interest payment in July as well.
The government-run company added that these bonds are Sovereign Guaranteed bonds, indicating that if MTNL defaults on the payment of principal and interest of the bonds then the Government of India is obliged to make the payment for the same. The sovereign guarantee will be invoked after the company sends a notice to the government.
Earlier this month, the company had requested Rs 1,151.65 crore from the government for paying the interest on sovereign guarantee bonds in the current fiscal.
The government allocated Rs 69,000 crore in the first revival package in 2019 to BSNL and MTNL that brought down operating costs. However, in 2022 the government allotted Rs 1.64 lakh crore for upgrading BSNL services, allocating spectrum, de-stressing its balance sheet, and augmenting its fibre network by merging Bharat Broadband Nigam Ltd. with BSNL.
Separately, the government in the budget has proposed to allocate Rs 3,668.97 crore for the payment of the principal amount of MTNL bonds.
Shares of MTNL rose as much as 3.30% during the day to Rs 62.99 apiece on the NSE. They closed 1.57% higher at Rs 61.94 per share, as compared with a 0.03% advance in the benchmark Nifty 50. It has risen 160.80% in the last 12 months and 86.57% year-to-date.
