MTNL share price zooms 18%; what fuelled rally in telecom stock?

Shares of Mahanagar Telephone Nigam Ltd. (MTNL) surged over 18% in early trade on Thursday amid report that the state-owned telecom firm earned ₹2,134.61 crore from the monetisation of lands and buildings. The telcom stock has rallied nearly 25% in two sessions, in an otherwise subdued broader market.

Early today, MTNL shares opened 6.8% higher at ₹46.30 on the BSE after closing 5.7% higher at ₹43.34 in the previous session. Extending opening gains, the PSU stock rose as much as 18.4% to hit a 3-week high of ₹51.30, while its market capitalisation climbed to ₹3,110 crore.

MTNL share price touched its 52-week high of ₹101.88 on August 29, 2024, and a 52-week low of ₹31.24 on March 20, 2024. The stock has risen 50% in a year, while it corrected over 17% in the past six months and lost over 4% year-to-date (YTD).

MTNL shares got boost today after the company along with its parent, Bharat Sanchar Nigam Ltd (BSNL), generated ₹12,984.86 crore from the monetisation of land, buildings, towers, and fibre since 2019, as per data shared by Minister of State for Communications Pemmasani Chandra Sekhar in the Lok Sabha on Wednesday. The sentiment was also lifter after the minister clarified that India is not privatising telecom firms BSNL and MTNL.

The minister informed the Parliament that BSNL has earned ₹2,387.82 crore and MTNL ₹2,134.61 crore up to January 2025 from monetisation of lands and buildings. "BSNL and MTNL are monetising only those land and building assets which are not required for their own use in the foreseeable future and for which it has the rights to transfer the ownership," Sekhar said in a written reply.

"The monetisation of assets is being carried out as per the approved policy of the government, and its impact on PSUs is being monitored closely," he added.

Last month, the telco secured government funding for 4G expansion. The central government, which holds 56.25% stake in MTNL, approved a financial package of approximately ₹6,000 crore to accelerate the 4G network expansion of BSNL and MTNL. The government has already provided financial support of ₹3.22 lakh crore to BSNL and MTNL through three separate revival packages.

The cabinet had previously approved a revival plan for BSNL and MTNL, which included reducing employee costs, allocating 4G spectrum, restructuring debt, and monetising assets. The plan also involved the merger of BSNL and MTNL and raising ₹17,571 crore through sovereign guarantee bonds by March 31, 2024, to address and restructure debt.

MTNL, which provides telecom services in Mumbai and New Delhi and in the island nation of Mauritius in Africa, recently signed a deal with BSNL to expand their 4G networks. In August last year, the two state-owned companies inked a 10-year agreement to enhance their network services, offering improved 4G connectivity to its customer base. As part of the deal, the companies will set up around 100,000 4G sites to expand their 4G networks across the country to compete with private players like Airtel, Vodafone Idea, and Reliance Jio.

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