MTNL Debt Hits ₹36,314 Cr, Skips Large Corporate Disclosure Rules

Mahanagar Telephone Nigam Ltd (MTNL) has confirmed it does not qualify as a 'Large Corporate' under SEBI's debt issuance disclosure rules. This decision is based on its financial status as of March 31, 2026, despite the company reporting total outstanding borrowings of ₹36,314 crore on that date.

The company's total borrowings include ₹24,071 crore in outstanding bonds and ₹9,263 crore in outstanding bank loans. Importantly, its bank loan borrowings carry a 'CARE D' credit rating, indicating a default or imminent default.

This classification means MTNL will not be subject to the stringent disclosure norms typically applied to 'Large Corporates' when the company plans to raise funds through debt securities.

Why This Matters

SEBI's 'Large Corporate' framework requires companies meeting specific thresholds, such as substantial long-term borrowings and a credit rating of 'AA' or above, to raise a minimum percentage of their new debt via the bond market. By not meeting these criteria, MTNL bypasses these obligations. This could influence the structure and ease of its future debt-raising activities.

Background

MTNL, a state-run telecom provider serving Delhi and Mumbai, has a history of financial challenges. Like its counterpart BSNL, MTNL has contended with significant losses and heavy debt burdens. Its bank loans are rated 'CARE D', a stark contrast to its sovereign-guaranteed bonds, which hold a top 'CARE AAA (CE)' rating. The company's large borrowing amount and the poor rating on its unsecured bank facilities are key reasons why it does not meet the 'Large Corporate' criteria, which requires a credit rating of 'AA' or higher.

What Changes Now

• MTNL is not required to comply with the 25% mandatory debt issuance norm for 'Large Corporates'.
• Stricter disclosure requirements for its debt-raising activities will not apply.
• The company retains flexibility in how it structures future debt issuances.

Risks to Watch

The 'CARE D' rating on MTNL's bank loans is a significant concern. This rating signifies that the company is currently in default or highly likely to default on its bank borrowings, which are not covered by sovereign guarantees. MTNL's loan account with Bank of India was classified as a Non-Performing Asset (NPA) starting September 2024, highlighting severe liquidity issues.

Peer Comparison

MTNL operates in a challenging environment alongside other state-owned telecom firms like BSNL. BSNL has also faced severe financial distress, significant losses, and difficulties in paying employee salaries and operational expenses. Both entities illustrate the broader financial pressures within India's public sector telecom sector, often weighed down by high operational costs and competitive market challenges.

Key Figures

• Total Outstanding Borrowing as of March 31, 2026: ₹36,314 crore.
• Outstanding Bond Borrowing as of March 31, 2026: ₹24,071 crore.
• Outstanding Bank Loan Borrowing as of March 31, 2026: ₹9,263 crore.

What to Track Next

• MTNL's future debt issuance plans and their structure.
• Any updates or changes to the 'CARE D' credit rating for its bank loans.
• Broader financial health improvements or restructuring initiatives for MTNL.