Here's why MTNL shares zoomed over 17% today

Shares of MTNL zoomed over 17 per cent to hit an intraday high of Rs 30.50 on BSE after the government deferred the merger of state-run telecom firms BSNL and MTNL due to financial reasons.

The stock ended 11.6 per cent higher at Rs 29.20 against the previous close of Rs 26.15. Market cap of the firm rose to Rs 1,839.60 crore. The shares stand higher than 5-day, 20-day, 50-day, 100-day and 200-day moving average.

Minister of State for Communications Devusinh Chauhan in a written reply to the Rajya Sabha said that a proposal for the merger of Bharat Broadband Network Limited (BBNL) and Bharat Sanchar Nigam Limited (BSNL) is under examination.

"Government has approved the revival plan of Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) on October 23, 2019, which inter-alia includes in-principle approval for the merger of MTNL and BSNL. Due to financial reasons including high debt of MTNL, the merger of MTNL with BSNL is deferred," Chauhan said. 

BSNL Chairman and managing director PK Purwar, who also heads MTNL, has submitted before a Parliamentary panel that the Department of Telecom should consider carving out of over Rs 26,500 crore debt of MTNL and its assets under a special purpose vehicle.

He suggested that thereafter operations of MTNL should be merged with BSNL. MTNL was earlier expected to turn profitable by 2020-21 and BSNL by 2023-24 after both PSUs were jointly given a relief package of around Rs 70,000 crore in 2019.

"With Rs 26,000 crore debt, even if God comes to earth and tries to address its problems, the company cannot be revived. It is a fact of life; we have to accept it," MTNL CMD told the panel.

The company reported a year-on-year consolidated net loss of Rs 659.28 crore, down 3 per cent in the quarter ended December 31, 2021. The company had posted a net loss of Rs 637.78 crore in the year-ago period.

Net sales for the period came in at Rs 303.56 crore, down 16 per cent for the December quarter, from Rs 360.49 crore in December 2020.
 

(With inputs from PTI)