MTNL surges 17% on merger talks with BSNL

Mahanagar Telecom Nigam (MTNL) surged more than 17 per cent on an intra-day basis on Wednesday and closed at Rs 26.10 on the NSE. The sharp surge was on account of BSNL-MTNL merger plan coming back on the discussion table.

The proposal for merger of BSNL and MTNL has been hanging fire since long. Top officials at the Ministry of Communications are once again weighing various options before the two loss-making state-owned entities merge. The merger talks have been initiated on the back of consolidation in the telecommunication sector.

According to reliable sources, a top-level meeting recently discussed possibility of merging both the entities that are facing financial stress due to increasing competition in the sector.

BSNL is keen on picking up mobile operations of MTNL in Gurgaon, Noida and Faridabad, where it is already offering landline and broadband services. The other option could be the acquisition of MTNL's mobile operations in Delhi and Mumbai - the two metros it operates in.

MTNL is debt-laden and the merger move will be positive for it, while BSNL will have to bear the brunt. The company has total debt of Rs 19418 crore as at the end of Q3FY17.