MTNL bond issue raises INR15bn to trim debts

24 Nov 2014

State-owned telco Mahanagar Telephone Nigam Ltd (MTNL) has raised INR15 billion (USD243.29 million) by selling bonds to institutional investors, the Business Standard writes. The operator plans to use the funds to clear some of its debt, which reportedly stood at INR147.6 billion at the end of June this year. Commenting on the bond sale, a spokesperson for MTNL was quoted as saying: ‘We floated an INR1,000 crore [INR10 billion] ten-year bond issue, which was fully subscribed. We have received bid worth INR1,500 crore [INR15 billion] from investors and we will retain the full amount using the green-shoe option [also known as over-allotment option].’ As noted by TeleGeography’s GlobalComms Database, the Indian government has been taking measures in recent years in an effort to revive the sinking telecoms ships of MTNL and its larger sister firm Bharat Sanchar Nigam Ltd (BSNL). In September 2013 the government agreed to shoulder the burden of MTNL’s pension liabilities, whilst staff also agreed to a pay cut to bring their wages in line with those of BSNL. By far the greatest of its expenses, employee costs in the year to end-March 2013 totalled INR49.01 billion, whilst revenues for the year were just INR34.29 billion. Government assistance however saw the telco drop employee-related costs to INR26.15 billion the following year. In another effort to aid the ailing operator in January 2014, the government agreed to refund MTNL INR14.05 billion for unused frequencies which it had relinquished to the state.