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State-owned telecom players Bharat Sanchar Nigam Limited (BSNL) & Mahanagar Telephone Nigam Limited (MTNL) are aiming to raise over Rs 19,000 crores or $2.34 billion by way of government-backed bonds.
Late in September 2022, it was announced that both companies were given a sovereign guarantee of around Rs 19,000 crores in order to assist the distressed telecoms to restructure their debt, which was reportedly around Rs 60,000 crores.
Both telecoms have been distressed for a very long time. Both companies were set to be merged together under a rescue plan of Rs 70,000 crores in October 2019 to create synergies between the two and make a single entity.
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However, the same was delayed due to certain financial reasons. Moreover, in July 2022, the Cabinet cleared a Rs 1.64 lakh crore revival package for BSNL to upgrade its network and stabilize it's balance sheet. The effects of the same are unclear as the company is yet to launch its 4G network when all private players have already begun 5G operations.
MTNL is planning to issue sovereign guaranteed bonds worth Rs 10,910 crores against a guarantee of the same amount in November by way of government-guaranteed 10-year bonds with semi-annual interest. The funds raised will be used to serve old bonds and bank loans.
BSNL is planning the balance by issuing 10-year bonds against a guarantee of 8,446 crores by the end of November or early December.
However, despite the government guarantee, the spread over bonds may widen this time as the companies are expected to pay a higher yield this time due to unfavorable market conditions.
BSNL is not listed. MTNL closed at Rs 21.50 per share on Friday, losing over a third of its value in 2022.
Article by Aman Agarwal.
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