'Not correct': MTNL clarifies on interest payment default report; stock down 3%

Shares of Mahanagar Telephone Nigam Ltd (MTNL) issued its clarification on Tuesday over a new report, titled: "MTNL defaults on interest payment for sovereign guarantee-backed Rs 6,100 crore". The state-run telecom PSU claimed that the said report "is not correct."

"We would like to inform you that 05th Semi Annual Interest w.r.t. 8.00 % MTNL Bond Series VII A (INE153A08105) is due on 15th May 2025. As per the Structured Payment Mechanism of Tri-Partite Agreement (TPA) signed among MTNL, Department of Telecommunications (DoT), Ministry of Communications, Govt. of India and Beacon Trusteeship Limited, MTNL has to fund the semi-annual interest into the ESCROW Account with adequate amount 10 days before the due date. It may also be mentioned that all Bonds issued by MTNL are Sovereign Guaranteed Bonds by Government of India. However, in case of any default made by MTNL in payment of Principal and Interest on the Bonds issued by it then Sovereign Guarantee will be invoked by the Debenture Trustee and the Government of India is obliged to make the payment to MTNL for the same. The invocation of Sovereign Guarantee is based on Tripartite Agreements (TPA) entered into between Govt of India, Debenture Trustee and MTNL which were filed with BSE when Bonds were listed. In view of above provisions of TPA, it is informed that due to insufficient funds MTNL could not fund the ESCROW Account with the adequate amount. Kindly take the same on record," it stated.

"It may be mentioned that MTNL had intimated non funding of Escrow Account maintained with Bank of India 10 days before the due date of payment of 05th Semi Annual Interest w.r.t. 8.00 % MTNL Bond Series VII A (INE153A08105) which is due on 15th May 2025," MTNL added.

"It is to be informed that as per the Structured Payment Mechanism of Tri-Partite Agreement (TPA) signed among MTNL, Department of Telecommunications (DoT), Ministry of Communications, Govt. of India and Beacon Trusteeship Limited, the Government of India funds the ESCROW Account with adequate amount 3 days before the due date of payment of Interest after issue of Notice of Invocation of Guarantee by the Debenture Trustee," the state-owned firm further stated.

On the stock-specific front, MTNL was down 2.67 per cent at Rs 41.18. At this price, it has corrected 19.87 per cent year-to-date (YTD).

Technically, the scrip traded lower than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-day and 200-day simple moving averages (SMAs). Its 14-day relative strength index (RSI) came at 40.79. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The company's stock has a negative price-to-earnings (P/E) ratio of 0.78 against a price-to-book (P/B) value of (-)0.10. Earnings per share (EPS) stood at (-)52.60 with a return on equity of (RoE) 13.10. According to Trendlyne data, MTNL has a one-year beta of 1.6, indicating high volatility.

"At present, 56.25 per cent of equity shares are held by the government and the remaining 43.75 per cent of shares are held by FIIs, Financial Institutions, Banks, Mutual Funds and others, including individual investors," MTNL mentioned.