Trending PSU Stock: MTNL-BSNL merger plan to be reviewed by DoT

Coming as a ray of hope for the telecom player, Mahanagar Telephone Nigam Limited, the department of telecommunications has set up a committee to examine the suggestions made in a Deloitte report regarding the revival of the telecom company.

Audit giant, Deloitte, has suggested a merger between Mahanagar Telephone Nigam Limited (MTNL) and Bharat Sanchar Nigam Limited to revive MTNL that has been incurring major loss and operational limitations off late.   

The stock of Mahanagar Telephone Nigam Limited buzzed in the market with release of this news, with the share price of MTNL rising over 7 per cent on the bourses on July 12.

The Deloitte report suggested two options, of which, the first one comprised of 7-8 standalone recommendations that included, merger of MTNL’s wireless division with BSNL, implementation of voluntary retirement scheme at MTNL, monetisation of the telecom company’s lands and buildings and financial support for the expansion of the company’s network. Whereas, the second option suggested a complete merger of MTNL with BSNL.  

MTNL has a debt of around Rs 20,000 crore, and posted a net loss of Rs 634.8 crore for the quarter ended on 31 March 2017. The company also posted a doubling loss of Rs 2,963.05 crore in FY17, compared to the loss in previous fiscal.   

In the intraday trade on July 13, 2017, the stock was trading choppy at Rs 21.40, down by 1.15 per cent on the BSE. However, the S&P BSE Telecom index was trading at 1394.73 level, up by 0.46 per cent at the same time.