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MTNL's domestic offering put off - Views on News from Equitymaster
 
 
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  • Nov 10, 1999

    MTNL's domestic offering put off

    According to newspaper reports, the domestic public offering of Mahanagar Telephone Nigam Limited (MTNL) has been deferred owing to differences between the Ministry of Finance (MoF) and the Department of Telecommunications (DoT). The domestic offering was aimed at offloading some 13 m shares held by the government.

    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 telecom license to operate in New Delhi and Mumbai until the year 2013.

    While the DoT and MTNL were in favour of deferring the issue in view of the decline in the local share price, the MoF preferred a quick sell off before the end of the year. The urgency on part of the MoF is justified on the grounds that the government's fiscal deficit is likely to balloon well beyond the budgeted limit. With tax collections failing to live up to expectations, the only other source is the proceeds from the disinvestment of holdings in various public sector units.

    As stated in an earlier report, the issue will not have significant implications for MTNL. While the proceeds from the issue will go to the government, there will not be any significant alternation in ownership. The government would continue to own a majority 51% stake in the company.

     

     

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