MTNL denies default on sovereign-backed bond interest payment

New Delhi: State-run Mahanagar Telephone Nigam Limited (MTNL) has refuted reports of a default on interest payments for its Rs 6,100 crore sovereign guarantee-backed bonds, calling the claims “incorrect.”

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In a regulatory filing, the telecom PSU clarified that while it has not yet funded the Escrow Account for the 5th semi-annual interest payment due on May 15, 2025, this does not constitute a default under the terms of the Tripartite Agreement (TPA) signed with the Department of Telecommunications (DoT), Ministry of Communications, and Beacon Trusteeship Limited.

MTNL explained that as per the TPA, the Escrow Account must be funded by MTNL 10 days ahead of the due date. However, in the event of insufficient funds, the sovereign guarantee issued by the Government of India ensures that the payment obligation will be met following a formal notice of invocation by the Debenture Trustee.

“All bonds issued by MTNL are backed by a sovereign guarantee. In the case of any default, the Government of India is obliged to make the payment,” the company said, adding that the invocation mechanism and obligations are well-defined under the agreement and were duly filed with stock exchanges.

The clarification comes after a news item published by the various newspapers and news portal on May 5, 2025.

MTNL has urged the stock exchanges and stakeholders to disregard the report and treat its official communication as the accurate position.

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