MTNL jumps 10% on reports of bailout package from government

BSNL is India’s largest loss-making state-run entity, with losses estimated at Rs 13,804 crore as of FY19-end.

Shares of Mahanagar Telephone Nigam rallied 10 percent intraday on July 3 on reports of a likely big bailout package for the state-run telecom companies.

The government is working on a Rs 74,000 crore bailout package for state-run telecommunication companies Bharat Sanchar Nigam (BSNL) and MTNL, reported The Times of India.

The scheme involves an attractive exit package of an additional five percent compensation (ex-gratia) and provisions for 4G spectrum and capital expenditure, the report said.

The report said of the proposed bailout, about Rs 20,000 crore will be allotted for 4G spectrum and Rs 40,000 crore for a voluntary retirement scheme (VRS) and early retirement benefits. The two PSUs will, however, pay roughly Rs 13,000 crore on capital expenditure.

Moneycontrol could not independently verify the report.

BSNL and MTNL have been struggling to compete with private players in the sector due to high costs and poor management. Neither company has rolled out 4G services, while private companies launched their offerings a few years back. The average revenue per user (ARPU) of these two telcos stands at Rs 38 compared to Rs 70 for private players.

The stock was quoting at Rs 9.20, up to Rs 0.68, or 7.98 percent on the BSE at 1130 hours IST.

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