MTNL has raised Rs 1,500 crore by selling bonds to institutional investors on Monday at 8.41 % annual rate and the funds would be used to repay debt.
“We floated a Rs. 1,000 crore 10-year-bond issue, which was fully subscribed. We have received bids worth Rs. 1,500 crore from investors and we will retain the full amount using the green-shoe option,” according to a report.
However, the amount raised will be used for paying the debt, which stood at Rs 14,760 crore at the end of June this year.
In the meantime, the company has been losing market share over the last many years. MTNL’s market share has come down to 4.83% as of May 2014 from 10.87% in March 2009.
On the other hand, the government is taking various measures to revive the company. Last year in September, it decided to refund about Rs. 5,700 crore to MTNL which it has to pay for wireless broadband spectrum in Delhi and Mumbai in 2010. In December 2013, then Dr. Manmohan Singh government also approved pension support to MTNL for about 43,000 employees who joined the state-run firm from Department of Telecommunication.
Plus, this led to infusion of an additional amount of about Rs. 1,500 crore (including interest) into MTNL as refund from government for the pension paid by the company to its staff.
In addition, on account of these decisions, MTNL earned a book profit of Rs. 2,348.49 crore for the FY 2013-14. In 2012-13, MTNL recorded a net loss of Rs. 5,321.12 crore on annual revenue of Rs 3,428.6 crore.