MTNL share price was stuck in the upper circuit of 5% today a day after PM Narendra Modi-led Cabinet announced the merger of the telco with its state-owned counterpart BSNL. MTNL share price was locked in the upper circuit of 5% at Rs 6.19 compared to the previous close of Rs 5.90 on BSE. Market capitalisation of MTNL stock stood at Rs 389.97 crore on BSE.
On Wednesday, MTNL share price opened at Rs 5.86 against the previous close of Rs 5.62 on BSE. The stock saw steady gains till 2:00 pm after which it was stuck in the upper circuit of 5% at Rs 5.90 till market closed.
The stock finally closed 5% or 0.28 points higher at Rs 5.90 on BSE. On NSE too, the stock closed 4.46% higher at Rs 5.85. MTNL share price has gained 19.96% in the last four sessions. However, the share has lost 53.03% in last one year and fallen 61.77% since the beginning of this year.
MTNL share hit a 52-week high of Rs 19.40 on January 1 this year and fell to its 52-week low of Rs 4.49 on August 23, 2019. After the market closed yesterday, the Cabinet headed by Prime Minister Narendra Modi announced revival plan for both telcos.
Telecom Minister Ravi Shankar Prasad said the government would put in Rs 29,937 crore for revival of the two state-owned telecom companies and their assets worth Rs 38,000 crore would be monetised.
The Cabinet also cleared allocation of 4G spectrum to Public Sector Enterprises to enable them to provide broadband and other data services.
"The said spectrum will be funded by the Government of India by capital infusion in these PSUs at a value of Rs 20,140 crore in addition; the GST amount of Rs 3,674 crore to this spectrum value will also be borne by the government through Budgetary resources," said a government statement said.
Prasad also said the government planned to raise a sovereign bond of Rs 15,000 crore for their revival.
Additionally, the government will offer a voluntary retirement scheme to the employees of these companies to cut cost, said Prasad. "BSNL and MTNL will also offer voluntary retirement to their employees, aged 50 years and above through attractive Voluntary Retirement Scheme, the cost of which will be borne by the government of India through budgetary support," the statement said.
The ex-gratia component of VRS will require additional funds of Rs 17,169 crore. The government will also meet the cost towards pension, gratuity and commutation.
In a statement, the office of Ravi Shankar Prasad tweeted the merger would be "operationalised gradually". MTNL will be become a subsidiary of BSNL till the merger is completed. "BSNL and MTNL are strategic assets of India. They cater to the needs of people during disaster. They provide important communication services to government," it stated.
By Aseem Thapliyal