MTNL Aiming to Roll Out 4G Services in 9-12 Months After the Hike of Borrowed Limit

Mahanagar Telephone Nigam Limited (MTNL)  is planning to seek approval for raising its authorised share capital to Rs 10,000 crore. The government-owned entity also plans to borrow powers by almost 40%, which will aid the telco’s 4G plans and provide it with the firepower to compete in the market. MTNL has been struggling a lot in recent times, especially after the entry of Reliance Jio to the Indian market. Also, MTNL has lined up for an annual general meeting on September 28 to raise the authorised share capital to Rs 10,000 crores from Rs 800 crores, as an enabling provision.

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It has also sought shareholders’ approval for raising the borrowing powers of the board to Rs 25,000 crore from the current Rs 18,000 crore and issue of non-convertible debentures on private placement basis, said P K Purwar, Chairman at MTNL, according to PTI. Much of this is being done in anticipation of 4G spectrum allocation by the government as and when it happens, Purwar said adding that increase in borrowing powers would be crucial to meet the capital expenditure needs for the roll-out of such services.

MTNL Aiming to Launch 4G Services in 12 Months

All private operators that MTNL competes within the market already have aggressive 4G offerings and India is now making a compelling pitch to be a frontrunner in the global 5G space. Once a household name, MTNL, which provides services in Delhi and Mumbai, has been relegated to a distant fourth operator in the market alongside Bharat Sanchar Nigam Ltd, another telecom PSU. The one billion subscribers-plus mobile market in India – incidentally world’s second largest after China – is growing exponentially as private operators like Vodafone Idea Ltd (merged entity), Bharti Airtel and Reliance Jio compete fiercely to lure subscribers with rock-bottom data tariffs and attractive offers.

MTNL admits it should have “entered 4G services 1-1.5 years ago”, but that non-availability of spectrum posed a roadblock.

“The market is changing significantly from 3G for 4G. So, we have submitted a proposal to the Telecom Department for allotment of 4G spectrum. The proposal is that spectrum should be given by the government as licensor, and, secondly, as a promoter (of MTNL) it (government) should render the support in terms of infusion of equity (in lieu of 4G spectrum allocated),” Purwar told PTI.

Hence the proposals being placed before MTNL shareholders later this month will be enabling provisions in anticipation of 4G plan execution.

“In case, the government accepts our proposal, MTNL should be able to execute it. We have asked for 5MHz spectrum in Mumbai and 10 MHz in Delhi, the value of spectrum is Rs 8,600 crore…this requires the issue of equity, and so it is an enablement provision…the notice to shareholders mentions that this is subject to allotment of spectrum by the government,” he said. Similarly, the raising of borrowing powers would help the company tide over the capex needs involved in the 4G rollout.

“Once we get the 4G spectrum, investment will be required for services and capital expenditure to the tune of Rs 1,300-1,500 crore beyond the cost of spectrum. For that, we would like to utilise borrowing and are hence increasing the borrowing limits of MTNL,” he said. Even after the necessary approvals and grant of the spectrum, it will take almost 9-12 months for MTNL to roll out the 4G network and commercial services to customers, he noted.

On the issue of non-convertible debentures (NCDs) on private placement, MTNL has said that approval of members is being sought to authorise the board “to offer or invite or invite subscriptions for government guaranteed/ unsecured/ listed/ redeemable non-convertible debentures in the nature of bonds (NCDs), in one or more series/tranches, aggregating up to Rs 5,500 crore on private placement basis…”

Today, most of MTNL’s loans are from banks, which are expensive as compared to sovereign guarantee bonds, Purwar explained.

“So we are asking Telecom Department and the Finance Ministry to provide us with a window to raise bonds from the market on the strength of sovereign guarantee. If it comes through, then our cost of borrowings will decrease by almost one per cent, which will give us saving of Rs 50 crore annually, reducing MTNL’s financial burden,” Purwar added.

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6 Comments on "MTNL Aiming to Roll Out 4G Services in 9-12 Months After the Hike of Borrowed Limit"

 

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@nonymous
September 3, 2018 8:16 pm 8:16 PM

Duniya 5g ki baatein kar rahi hai aur MTNL agle 1 saal me 4g chaalu Karne ka daawa seena thok ke kar rahi LMAO

Atheist
September 3, 2018 7:29 pm 7:29 PM

12 months more means 24 months more! And then 5 yrs more for Volte. Should directly hop to 5G. MTNL is embarrasaing!

LalitK
September 3, 2018 6:02 pm 6:02 PM

they are improving but at a very slow speed, i wonder whether they will get the approvals.

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