MTNL fails to fund semi-annual ESCROW deposit due to insufficient funds

Mahanagar Telephone Nigam Ltd (MTNL) on Thursday informed exchanges that it could not fund the semi-annual ESCROW account deposit due to insufficient funds. "We would like to inform you that the 8th Semi-Annual Interest w.r.t. 6.85 percent MTNL Bond Series VI (INE153A08097) is due on December 21, 2024. As per the Structured Payment Mechanism of Tri-Partite Agreement (TPA) signed among MTNL, the 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," the telecom company stated in an exchange filing.

It is informed that due to insufficient funds MTNL could not fund the ESCROW Account with the adequate amount, it added.

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It is also required to be mentioned that all bonds issued by MTNL are sovereign guaranteed bonds by the government. "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 Govt 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," the state-owned telecom firm also stated.

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

On the stock-specific front, MTNL shares surged 9.75 percent to hit a day high of Rs 59.75. It was last seen trading 8.56 per cent up at Rs 59.10. At this price, the scrip has gained 24.63 per cent in a month.

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The telecom PSU reported a net loss of Rs 888.41 crore for the second quarter that ended September 30, 2024 (Q2 FY25) as against a loss of Rs 771.82 crore in the previous quarter (Q1 FY25). Revenue slipped to Rs 158.80 crore in Q2 FY25 from Rs 169.40 crore in June 2024 quarter.

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