MTNL plans to restructure Rs 3000 crore into debt

Posted By: Religare
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MTNL plans to restructure debt
After recording the net loss of Rs 2,826 crore in 2010-2011, the PSU is now planning to convert its Rs 3000 crore into long-term debts.

The PSUs is already working upon the plan of establishing a pan-India service in collaboration with BSNL. MNTL is currently operating in the metros- Delhi and Mumbai. MNTL that has already launched 3G mobile services, posted this loss as its inability to cope with pace of the private providers.

The recorded loss was up by 8.27 per cent against Rs 2,610.9 crore in the same period previous year. Allocation of 3G and BWA spectrum was allocated to MTNL a year ago. At that time the company was asked to pay as the final bid in the auction that ended on May 19 for 3G and June 11 for BWA.

Eventually, Delhi and Mumbai being the most expensive circles for 3G, the bid for Delhi cost Rs 3,316.93 crore and Mumbai Rs 3,247.07 crore, against Rs 320 crore which was kept as the reserve price for both the metros. A similar condition was observed in case of BWA that recorded a bid of Rs 2,241.02 and 2,292.95 crore in Delhi and Mumbai respectively.

As per the plan, MNTL is planning to restructure the loan of Rs. 7000 that it took in order to buy 3G and Broadband spectrum last year. However, it has decided to Rs 3000 out the amount as long-term debts.

The PSU has reported to have that repaid of Rs. 500 crore, restructuring Rs 3500 crore and have further tied up with state banks in order to restructure the remaining Rs. 3000 crore.

The sources have reported that company would be following a 'ballooning structure". According to this structure, the company would convert its short-term loan into long terms debts. To do this, the company would take mark tenure of seven years, staring the process from July this year.

During the tenure, the company would be paying the interest only for the initial tree years, however, for the next four years; it would be paying the principal amount.

Read more about: mtnl, telecom, debt, bse, nse
Story first published: Wednesday, May 18, 2011, 9:30 [IST]
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