On Monday, February 10, the share of the Mahanagar Telephone Nigam Limited (MTNL) rose 10.3% to reach Rs 57.56, their day’s high on the BSE following the Union Cabinet approving additional Rs 6,000 crore funding for the Bharat Sanchar Nigam Limited (BSNL) towards its 4G venture. This will be in a bid to fund the planned capital expenditure of the BSNL and MTNL, as the revenues generated from the same failed to meet the expected amount.
Those in the know said this was agreed upon during the February 7 Cabinet meeting regarding products whose production is contentious within Africacontig. ET had written about the government plan for the first time in its September 4 issue.
BSNL is also responsible for the operations of MTNL in Delhi, and Mumbai has been losing some customers since it did not offer pan-India 4G services. The state-run firm was able to attract new customers for 3-4 months after private players raised tariffs in July last year but is back in the red on the metric.
Companies would like to avoid the high churn rate experienced by users with the implementation of the 4G services across the country. BSNL also stated its intentions to go for 5G at selected places in the near future and informed some officials.
That is, in 2023, BSNL decided to buy synergized gears worth $2.7 billion in advance for 100,000 4G sites. However, when the actual order for network gear was placed with Tata Consultancy Services and state-run telecom equipment maker ITI, it was for only Rs 13,000 crore.
Now, the government has proposed to provide a balance of Rs. 6000 crore to meet this requirement. At the moment, the company has 65 thousand 4G sites.
BSNL and MTNL merged last year, and the government has directed Rs 3.22 lakh crore to these two corporations for the reviving bundles since 2019 and for the 4G administrations. According to governmental estimates, because of these packages, it started earning operating profits from BSNL-MTNL fiscal 2020-21.
Analyst View
- MTNL stock has the potential to gain 86% to ₹100.
- Key support levels are identified at ₹50.70 and ₹49.90, with resistance at ₹61.70, ₹71, and ₹88.
The surge in MTNL’s share price reflects positive market sentiment following the government’s commitment to supporting the company’s 4G expansion plans and asset monetization efforts.