Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) may get another relief package from the Indian government. It is worth noting that in the previous five years, the center has released three relief packages for BSNL. These relief packages have allowed BSNL to survive in India's fierce and competitive telecom landscape. A report from ET suggests that the government is considering a bailout package for public sector enterprises MTNL (Mahanagar Telephone Nigam Limited) and Rashtriya Ispat Nigam (RINL).
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The report said quoting an official that the government will be paying the bond dues of MTNL. This is not a new thing. Much recently, due to liquidity constraints, when MTNL couldn't pay the bond dues, the government stepped in to clear Rs 92 crores on behalf of the state-owned telecom operator. The steel and telecom ministries are in talks with the finance ministry about a bailout package.
A major chunk of MTNL's dues go towards banks. As per the report, MTNL's Rs 7,925 crore worth of bank dues is in focus for the government. MTNL has tried to talk with the lenders to restructure the debt in the past. MTNL had proposed a 40% repayment. However, this was rejected by the lenders as a 60% haircut is too steep. MTNL should have the creditworthiness of a sovereign-like creditworthiness.
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The banks are not interested in taking a stake in these companies against the loaned amount. Unless there is disinvestment on the table, the banks would not derive any value from getting a stake in a company like MTNL. It is worth noting that on Friday, MTNL's share price shot up 5% at the time of writing this to Rs 59.33. It will be interesting to see what actually happens to MTNL.
For now, it is confirmed that BSNL will overtake the entire operations of the company in the near future.
