MTNL Shares Jump Up More than 10% on Friday Morning, See Why

MTNL has had a very rough performance in the last few years. Especially since the time, the market became more about 4G and fibre broadband services. Operating in just two circles, MTNL couldn't really make an impact business-wise and is likely going to be operating in the shadows of BSNL, who will be the frontrunner of the company's services.

Highlights

  • Mahanagar Telephone Nigam Limited (MTNL), the sister telecom company of BSNL (Bharat Sanchar Nigam Limited), both of which are run by the government, is having a jolly day in the stock market on Friday.
  • MTNL's board has also approved the issue of sovereign guarantee bonds of Rs 17,571 crore.
  • MTNL has had a very rough performance in the last few years.

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MTNL

Mahanagar Telephone Nigam Limited (MTNL), the sister telecom company of BSNL (Bharat Sanchar Nigam Limited), both of which are run by the government, is having a jolly day in the stock market on Friday. The company's shares went up as much as 11% on Friday morning. At the time of writing, MTNL is trading for Rs 25.55, which is 7.3% in the green.




So why is MTNL in the focus of the investors?

First of all, BBNL (Bharat Broadband Network) is going to be merged with MTNL. Then, according to an ET report, the board of MTNL, on August 12, decided to approve the termination of the depository agreement with the Bank of New York Mellon (BNYM) and the delisting of MTNL's American depository shares listed in New York from October 1, 2022.

MTNL's board has also approved the issue of sovereign guarantee bonds of Rs 17,571 crore. This came as a part of the revival package that the Indian government announced for the state-run telcos.

However, there are also statements made on MTNL by some prominent people that we can't ignore. For instance, telecom minister Ashwini Vaishnaw had said MTNL has "no future". Then, MTNL's auditors of financial reports said that the company's net worth had completely deteriorated. Things like this suggest that the government doesn't have a lot of hopes for MTNL and would only be focusing on BSNL, which is now soon going to launch homegrown 4G networks.

MTNL has had a very rough performance in the last few years. Especially since the time, the market became more about 4G and fibre broadband services. Operating in just two circles, MTNL couldn't really make an impact business-wise and is likely going to be operating in the shadows of BSNL, who will be the frontrunner of the company's services.

On Friday, MTNL's stock touched a high of Rs 26.60 and had opened at Rs 25.75 after closing at Rs 23.85 on Thursday.

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