MTNL share price increased to a 52-week high on 18th/July/2024. The increase was determined by a 34.08% gain in the past 5-days. MTNL’s share prices are rising due to its management decisions and government support. However, MTNL’s partnership with BSNL and government intervention to secure bond payments had provided little relief to share investors.

Factors Driving MTNL Share Price Increase

MTNL’s share prices have increased due to strategic partnerships and government support. Proposed MTNL and BSNL mergers and financial improvement plans have impressed telecom sector investors to large extents. Additionally, asset monetization and debt management strategies have given the cognitive impression of positive movement in its share price.

Financial Challenges Faced by MTNL:

In the past, high debt levels, operational losses, and declining revenues have strained MTNL’s financial health. However, MTNL’s share price has calmed financial challenges in recent years. Additionally, MTNL reported losses of ₹3,267.5 crore in FY-2024 and revenue decline of 14.6% compared to previous years.

Proposed Merger with BSNL as Driving Factor

BSNL proposed merging with MTNL for more effective operations and efficiency. Airtel and JIO had captured an estimated 32.9% and 39.5% market share, respectively. Hence, the BSNL and MTNL merger centered around creating stronger organizations capable of competing with telecom giants and positively improving MTNL share price. Additionally, the merger aimed at the government’s drive to revive loss-making PSUs and leverage effective customer capturing and conversion.

Benefits of MTNL and BSNL Merger:

The merger between MTNL and BSNL aimed to reduce operational costs, optimize resource utilization, and strengthen market position. Additionally, it would help in offering a more comprehensive range of services, including internet, VoIP, and more network coverage. Thus, the utilization of network towers, servers, and telecom and IT infrastructure of MTNL and BSNL will eventually improve MTNL share price, customer satisfaction, and loyalty.

Challenges in MTNL and BSNL Merger:

MTNL and BSNL merger faced several challenges. Therefore, the approval process is expected to take a few months. Hence, the focus is on challenges related to regulatory approvals, integration of diverse organizational cultures, alignment of operational strategies, financial liabilities, management and allocation of financial assets, and managing the workforce.

Guarantees and Support for MTNL share price

The government provided guarantees, including backing sovereign bonds and preventing financial defaults during the merger. Additionally, management efforts signaled selling (or) leasing assets. Thus, these decisions will help generate funds for debt repayment and operational expenses. Furthermore, asset monetization will also improve MTNL’s liquidity in the market.

MTNL share price Conclusion

MTNL has considerable financial obligations. Hence, MTNL faced challenges with EMI payment on 10th/July/2024 to Punjab and Sind Bank. Therefore, it showed financial pressures and ineffective debt management of MTNL. Segments of MTNL share price analysts and investors are keen on continued progress, restructuring efforts, and regulatory support.

The low volatility of MTNL shares will take time. Hence, MTNL share value increase may be temporary, and its value may have high volatility. However, due to recent management decisions, government efforts, prospective merger, and guarantees, MTNL’s shares are sighted as good short-term investment options! Read more finance news and topics at FinanceReview.Org