MTNL Clarifies News on $5.1 Billion Bond Bill by Government
MTNL clarifies recent news about the government covering its $5.1 billion bond bill, stating the correct bond value is $2.47 billion and addressing factual errors in the Economic Times article.
by Damodharan N
Updated Jul 26, 2024
Table of Content
MTNL has issued a clarification regarding recent news reports about the government planning to pay a $5.1 billion bond bill for the financially struggling telecom company. On July 26, 2024, MTNL addressed this news through a statement to the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
Referring to an article on the Economic Times website dated July 25, 2024, which claimed that the government would cover the company’s bond liabilities, MTNL emphasized that it has consistently informed the stock exchanges about all significant events and price-sensitive information affecting its operations.
MTNL confirmed that it had already informed the stock exchanges on July 11 and July 17, 2024, about the funding of a designated ESCROW account for the payment of the second semi-annual interest related to its 7.59% Bond Series VIII-A, which was due on July 20, 2024.
The telecom company explained that its bonds are sovereign guaranteed by the Government of India. In case of any default in the payment of principal and interest by MTNL, the sovereign guarantee will be invoked by the Debenture Trustee, obligating the government to make the payment.
MTNL also stated that there are no ongoing negotiations or separate agreements other than the existing Tripartite Agreements (TPA) between the Government of India, the Debenture Trustee, and MTNL. The company reiterated that it has disclosed all required information under Regulation 30 of the SEBI (LODR) Regulations, 2015.
Furthermore, MTNL clarified that the total value of its sovereign guaranteed bonds is currently $2.47 billion with different maturity dates, not the $5.1 billion reported in the news. The company did not comment on the source or the material impact of the news article, as the information was not disseminated by MTNL.
MTNL hopes this clarification satisfies the stock exchange shareholders and the public at large to read the full statement of clarification from BSE Filings down below
Source: Here
Market Reaction
Following MTNL's clarification to the NSE at 2:44 PM and BSE at 2:02 PM on July 26, 2024, regarding the $5.1 billion bond bill rumor, the stock prices remained stable. On both exchanges, MTNL's stock price held steady at ₹97.08.
This stability contrasts with the price fluctuations on July 25, 2024, when the stock opened at ₹90 and closed at ₹92.46 on both NSE and BSE. The sharp price increase on July 25 appears to have been speculative.
MTNL's stock performance will likely be reassessed when trading resumes on Monday, especially considering the company’s recent financial struggles, having posted losses for the past eight quarters according to NSE Surveillance metrics.
NSE Live Price Here
BSE Live Price Here
NSE Surveillance Metrics Here
MTNL
MTNL, established on April 1, 1986, by the Government of India, aims to improve telecom services and expand networks in Delhi and Mumbai. Originating in Mumbai as Bombay Telephone in 1882, MTNL has been a leader in introducing innovative telecom services, including affordable mobile communication, 3G, VoIP, and IPTV.
Today, it serves over 4.5 million people in Mumbai, providing advanced technology at competitive rates and remaining a top choice for telecommunications in the city.
MTNL Clarifies News on $5.1 Billion Bond Bill by Government - FAQs
1. What was the recent rumor about MTNL?
The rumor claimed that the government would cover MTNL’s $5.1 billion bond bill.
2. What is MTNL's actual bond value?
MTNL’s actual sovereign guaranteed bond value is $2.47 billion.
3. How did MTNL address the rumor?
MTNL clarified the misinformation through statements to the NSE and BSE, emphasizing the correct bond value and addressing errors in the Economic Times article.
4. When did MTNL issue the clarification?
MTNL issued the clarification on July 26, 2024, with statements to the NSE at 2:44 PM and BSE at 2:02 PM.
5. What was the market reaction to MTNL's clarification?
Following the clarification, MTNL's stock price remained stable at ₹97.08 on both NSE and BSE, contrasting with earlier price fluctuations.
6. What were the stock price movements on July 25, 2024?
On July 25, 2024, MTNL’s stock opened at ₹90 and closed at ₹92.46 on both NSE and BSE.
7. What did MTNL say about the government’s role in bond payments?
MTNL confirmed that its bonds are sovereign guaranteed by the Government of India, meaning the government would cover any defaults through the sovereign guarantee invoked by the Debenture Trustee.
8. Are there any new agreements or negotiations regarding MTNL’s bonds?
MTNL stated there are no new agreements or negotiations beyond the existing Tripartite Agreements (TPA) with the Government of India and the Debenture Trustee.
9. Has MTNL disclosed all relevant information to the stock exchanges?
Yes, MTNL has disclosed all relevant information under Regulation 30 of the SEBI (LODR) Regulations, 2015.
10. What has been MTNL’s financial performance recently?
MTNL has posted losses for the past eight quarters, as per NSE Surveillance metrics.