MTNL defaults on bond repayment due Aug 24; Govt guarantee likely to be invoked

New Delhi: State-owned telecom operator Mahanagar Telephone Nigam Limited (MTNL) has informed that it will be unable to meet its upcoming bond interest payment scheduled for August 24, 2025, citing insufficient funds.

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In a regulatory filing on Thursday, MTNL said the fourth semi-annual interest of 7.61 percent on its MTNL Bond Series VIIIB is due later this month. Under the structured payment mechanism of a tripartite agreement (TPA) between MTNL, the Department of Telecommunications (DoT), and Beacon Trusteeship Ltd, the company is required to deposit the requisite funds into an escrow account with the Bank of India at least 10 days before the due date.

“Due to insufficient funds, MTNL could not fund the ESCROW account maintained in Bank of India with the adequate amount,” the company stated.

The debt-laden telecom firm emphasised that all its bonds are backed by sovereign guarantees from the Government of India. As per the guarantee terms, in the event of a default on principal or interest payments, the debenture trustee is mandated to invoke the guarantee, obliging the government to make the payment on MTNL’s behalf.

The development marks another instance of financial strain for MTNL, which has been grappling with mounting debt and declining revenues amid stiff competition in the telecom sector.

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