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MTNL: Dialing NYSE - Views on News from Equitymaster
 
 
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  • Jun 30, 1999

    MTNL: Dialing NYSE

    Mahanagar Telephone Nigam Limited (MTNL) is gearing up for the ADR issue, to be listed on the New York Stock Exchange (NYSE), planned within the next 3-4 months. In order to control expenditure, MTNL has proposed that the $ 100 m GDR issue, a part of the government's disinvestment program, be made jointly with the ADR issue. It has also been proposed that the GDR issue should have an option of conversion into ADRs.

    MTNL (FY99 Revenues: Rs 52.47 bn), a public sector company, is a franchise of the Department of Telecom. The company has a 15-year fixed line license to operate in New Delhi and Mumbai until the year 2013.

    A NYSE listing will be beneficial to the company in mainly three ways:

    • The company will have to follow the Generally Accepted Accounting Principles GAAP. This will result in increased transparency and better disclosure norms.
    • The issue will result in a higher liquidity in the stock of the company.
    • The issue will widen the investor base.

    Moreover, the clubbing of the two issues will lead to some cost savings on the account of issue expenses.

    Market View:
    The MTNL stock has been rated as a 'BUY' by analysts on account of it being one of the least expensive fixed line operators in the world. Moreover, the company already has a large customer base and a good infrastructure in place. It is also expected to earn substantially by using its existing infrastructure to provide value-added services.

     

     

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