New Delhi: Debt-laden telecom PSU Mahanagar Telephone Nigam Limited (MTNL) has defaulted on the interest payment for its ₹6,100 crore sovereign guarantee-backed bonds, the company disclosed in a regulatory filing.
MTNL had issued 5,000 government-guaranteed, unsecured, listed, redeemable non-convertible debentures worth ₹6,109.6 crore in November 2022. Under the Tri-Partite Agreement (TPA) between MTNL, the Department of Telecommunications (DoT), and Beacon Trusteeship, the telecom operator was required to deposit interest payments into an escrow account at least 10 days before the due date.
However, MTNL stated in its filing – “…it is informed that due to insufficient funds MTNL could not fund the ESCROW Account with the adequate amount.”
According to the bond terms, in case of any default, the sovereign guarantee is to be invoked by the debenture trustee, obligating the Government of India to make the payment on MTNL’s behalf.
The development highlights the ongoing financial distress at MTNL, despite government-backed support, and raises concerns over the future of similar state-supported liabilities.
