MTNL rejects default claims on ₹6,100 cr sovereign bonds, says govt will fund interest payment

State-owned telecom operator Mahanagar Telephone Nigam Ltd (MTNL) on Tuesday refuted reports claiming it defaulted on interest payments for sovereign guarantee-backed Rs 6,100 crore bonds, terming the news "incorrect."

In a regulatory filing to BSE and NSE, MTNL clarified that a news report published on May 5, 2025, titled "MTNL defaults on interest payment for sovereign guarantee-backed Rs 6,100 crore bonds," was inaccurate.

MTNL stated that it had informed exchanges on Monday about its inability to fund the escrow account with sufficient funds for the fifth semi-annual interest payment due on May 15. The bonds, issued in November 2022, are part of a ₹6,109.6 crore issuance of 5,000 government-guaranteed, unsecured, listed, non-convertible debentures.

As per the Tri-Partite Agreement (TPA) signed among MTNL, the Department of Telecommunications (DoT), and Beacon Trusteeship Limited, MTNL is required to fund the escrow account 10 days before the interest payment due date. However, due to insufficient funds, MTNL could not meet this requirement.

The company highlighted that the TPA allows the debenture trustee to issue a Notice of Invocation of Guarantee, after which the Government of India is obligated to fund the escrow account with adequate funds three days before the due date.

“It is to be informed that as per the Structured Payment Mechanism of Tri-Partite Agreement (TPA)/... the Government of India funds the ESCROW Account with adequate amount 3 days before the due date of payment of Interest after issue of Notice of Invocation of Guarantee by the Debenture Trustee,” the company said in its filing.

"Therefore, the news item... is not correct.”