Sources said that the government will honour its commitments on sovereign guarantees given for MTNL bonds and will pay whenever the sovereign guarantee is invoked on MTNL’s bonds.
However, the sources further said that the government has no plans to provide any form of direct financial assistance to MTNL.
The government has also asked MTNL to monetise its assets on priority, as per the sources.
Bloomberg had reported on Monday that the state-run telecom operator had fallen short of funds to honor its debt due later this week. MTNL has local-bonds worth ₹4,810 crore or $576 million to service for the rest of 2024.
MTNL could not pay interest on its 7.59% July 2033 bonds, which are guaranteed by the government. Interest payments on 14 bonds are due between July and December this year.
MTNL had reported a net loss of ₹3,270 crore in financial year 2024, higher than the ₹2,920 crore it lost in financial year 2023.
Despite this, shares of MTNL are trading 9.3% higher on Tuesday at ₹53.47. The stock has surged over 30% in the last four trading sessions.
(Edited by : Hormaz Fatakia)
Read More: MTNL interest obligations on bonds to be honoured by government: Sources