The shares of Mahanagar Telephone Nigam Limited (MTNL) saw substantial gains recently, hitting the upper circuit limit with a 20 percent surge to Rs 57.21 per share on February 5, 2025. This remarkable increase follows recent developments surrounding the government's asset monetization strategy aimed at addressing MTNL's significant debt burden.
MTNL, which has been grappling with financial challenges, recorded a staggering total debt of Rs 31,944.51 crore as of August 30, 2024. The company's struggles were exacerbated when it defaulted on loan repayments, including Rs 1,000 crore owed to the Bank of India. Other lenders, such as Union Bank of India and State Bank of India, have also raised concerns as MTNL has failed to meet loan installments totaling Rs 5,726.29 crore.
Telecom Minister Jyotiraditya Scindia confirmed on January 1, 2025, the merger of MTNL’s operations with Bharat Sanchar Nigam Ltd (BSNL). This strategic move is part of the government's broader effort to revitalize state-owned telecom services, which are operating under considerable financial strain.
The positive momentum for MTNL's shares was largely influenced by comments from Arunish Chawla, the Secretary of the Department of Investment and Public Asset Management (DIPAM). Speaking during the Budget 2025 Verdict, he assured stakeholders of the government's commitment to assist MTNL and BSNL by facilitating the monetization of their non-core assets. Chawla emphasized, "We are going to help MTNL and BSNL monetize whatever assets they have so we can clear liabilities and re-energize the sector."
This initiative is set against the backdrop of Finance Minister Nirmala Sitharaman's announcement of the Asset Monetization Plan for 2025-30, which aims to generate Rs 10 lakh crore through government asset sales. Part of this strategy includes monetizing MTNL’s properties valued at Rs 16,000 crore. The hope is to leverage these assets to reduce MTNL's mounting debt and enable the company to return to operational stability.
The price movement of MTNL's shares reflects strong market interest and increased trading volume, which tripled significantly to 21.17 million equity shares exchanged on February 5. Investors were buoyed not only by potential asset monetization but also by the new scheme introduced to improve broadband connectivity for government secondary schools and healthcare centers across rural areas, underscoring the government’s effort to strengthen telecom services.
Despite the optimistic outlook, analysts caution about the volatility of the situation. Avinash Gorakshkar, Head of Research at Profitmart Securities, recommended vigilance among investors until concrete divestment proposals are articulated. He noted, “The current rise is somewhat sentimental, as Minister Sitharaman did not mention specific plans for MTNL’s asset monetization during her Budget speech.”
On February 5, MTNL's stock performance demonstrated notable resilience, recovering from significant lows, such as its 52-week low of Rs 41.40 reached on January 28, 2025. Over the last month, the stock has gained momentum, climbing nearly 28 percent within just two trading days. The stock had experienced fluctuations previously, including a peak of Rs 101.88 on July 29, 2024, highlighting the stark changes in investor sentiment and company performance.
Market analysts expressed optimism surrounding the recent surge, indicating increased institutional and retail interest as the potential benefits of asset monetization take shape. MTNL's status as one of the few central public sector enterprises (CPSEs) with 'Navratna' designation adds to its market credibility, providing it with greater autonomy for capital expenditures and operational decisions.
The government's extensive revival plans for both MTNL and BSNL, which were initially outlined back in October 2019 and later expanded upon with funding commitments of Rs 1.64 trillion, have highlighted the importance of these telecom services to the Indian infrastructure ecosystem.
Despite the supportive measures, the Indian government's telecom revenue is projected to see instability, with expectations to fall by over 33 percent to Rs 82,442.84 crore for FY26 compared to Rs 1,23,357.20 crore for the current fiscal year, complicatiing the broader financial outlook of the sector.
Looking forward, investors will be keeping close tabs on how the government's strategies play out and their tangible impacts on MTNL's ability to manage its debts and maintain operational viability. The road to recovery remains challenging, yet the latest developments provide hopeful indications for MTNL’s future.