MTNL plans debt management, to repay loans soon

Saddled with huge loans of Rs 7,500 crore (Rs 75 billion) taken for buying 3G and broadband spectrum, state-owned Mahanagar Telephone Nigam Limited said on Friday it would repay most the debt within 6 months to one year and then go for long-term debt management.

"There are various options to go for long term debt management. First of all, we are going for credit rating of the PSU shortly," Kuldeep Singh, chairman and managing director, MTNL, told PTI.

The public sector unit had borrowed Rs 7,500 crore (Rs 75 billion) in the last one month to pay the government for acquiring 3G and Broadband Wireless Access spectrum in the two metros of Delhi and Mumbai.

All finances were arranged through short-term loan and at a very competitive rate of interest ranging between 7.3 to 7.5 per cent annually, he said adding the PSU was looking for starting various new services for generating additional revenues.

Prior to this, the public sector unit was a debt-free company and also has cash reserves but those may be utilised for future expansion and thus it is looking at an option of partly repaying the debts and then go for long-term debts.

It had raised funds from four banks -- ICICI Bank, Yes Bank, Axis bank and Central Bank of India.

MTNL operates in Delhi and Mumbai and was given 3G and BWA spectrum about a year ago on the condition that the PSU would pay as per the final bid in the auction, that ended on May 19 for 3G and June 11 for BWA.

Delhi and Mumbai were the costliest circles as the bid for Delhi was Rs 3,316.93 crore (Rs 33.16 billion) and that for Mumbai was Rs 3,247.07 crore (Rs 32.47 billion) against the reserve price of Rs 320 crore (Rs 3.2 billion) each for both the metros in case of 3G.

Similarly for BWA, Delhi and Mumbai saw the highest bids at Rs 2,241.02 crore (Rs 22.41 billion) and 2,292.95 crore (Rs 22.92 billion), respectively.

MTNL has already launched 3G mobile services.