MTNL Shares Surge 20% on Asset Monetization Plan and Budget 2025 Boost

resr 5paisa Research Team

Last Updated: 5th February 2025 - 01:03 pm

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Shares of Mahanagar Telephone Nigam Ltd. (MTNL) surged 20% to reach the upper circuit limit of ₹57.21 during morning trade on Wednesday, February 5. This sharp rise was driven by optimism surrounding its asset monetization strategy for FY26, following a 7% gain in the previous session, which ended a two-day decline.

As of 10:20 AM, MTNL's share price were trading at ₹56.6 on the NSE, reflecting an 18.8% increase from the previous close. Over the past three months, the stock has gained more than 17%.

The rally was fueled by remarks from Arunish Chawla, Secretary of the Department of Disinvestment and Public Asset Management (DIPAM), during CNBC-TV18’s Budget 2025 Verdict discussion. Chawla reiterated the government's support for MTNL and BSNL in monetizing their assets to unlock value, settle liabilities, and revitalize the sector.

"We are going to help MTNL and BSNL in monetizing whatever assets they have so that the value that is locked in can be redeployed, liabilities are cleared, and we can re-energize the sector," he stated.

MTNL, struggling with significant debt, was classified as a Non-Performing Asset (NPA) by most state-owned lenders in October last year. Meanwhile, Finance Minister Nirmala Sitharaman, in her Union Budget 2025 speech, introduced a scheme aimed at expanding broadband access to select government schools and health centers.

Following these developments, the broader telecom sector saw gains, with the BSE Telecom Index rising 1.4% to 2,806.

Despite the renewed government focus on the telecom sector, official budget documents indicate that telecom revenue is projected to decline by over 33%—from ₹1,23,357.20 crore in the current fiscal to ₹82,442.84 crore in FY26. This decline persists despite upcoming payments from telecom operators for deferred spectrum and adjusted gross revenue (AGR) dues, with the moratorium set to end in September 2025.

The government's telecom earnings primarily stem from license fees and spectrum usage charges (SUC), both tied to telecom operators’ AGR. Operators contribute 8% of AGR as license fees, while SUC—previously at 3-4%—has dropped below 1% due to the removal of the 3% floor and the waiver on SUC for spectrum acquired post-July 2022. Revenue from private telecom networks is generated through fixed license fees and a nominal one-time entry charge.

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