Mahanagar Telephone Nigam Limited (MTNL) has successfully funded its designated escrow account for the upcoming semi-annual interest payment on its bond series. The government enterprise completed this funding on February 21, 2026, ensuring timely preparation for the scheduled interest disbursement.

Bond Series Details and Payment Schedule

The funding pertains to MTNL's 7.80% Bond Series VIID, which carries the ISIN code INE153A08139. This represents the 6th semi-annual interest payment for this particular bond series, with the payment due date scheduled for February 24, 2026.

Regulatory Compliance and Escrow Management

The company has maintained a designated escrow account with Bank of India specifically for this bond series. This arrangement ensures that funds are readily available for interest payments, providing security to bondholders and demonstrating the company's commitment to meeting its debt obligations.

MTNL has informed both BSE Limited and National Stock Exchange of India Limited about this funding completion, maintaining compliance with Regulation 30 of SEBI (LODR) Regulations, 2015. The company secretary, Ratan Mani Sumit, signed the regulatory disclosure on February 21, 2026.

Corporate Structure and Communication

As a Government of India enterprise, MTNL operates from its registered and corporate office located at Mahanagar Doorsanchar Sadan, 5th Floor, 9 CGO Complex, Lodhi Road, New Delhi. The company maintains transparency with stakeholders through regular regulatory filings and maintains active communication channels through its official website and designated email addresses for investor relations.

Mahanagar Telephone Nigam Limited's non-convertible debentures worth INR175.71 billion remain under close scrutiny as India Ratings and Research maintains them on Rating Watch with Negative Implications. The rating action, announced on February 19, 2026, reflects ongoing concerns about adherence to structured payment mechanisms despite continued government support.

Rating Details and Current Status

The rating agency has maintained the NCDs with an IND AAA(CE) rating, supported by Rating Watch with Negative Implications. The credit enhancement suffix indicates external credit support through a pre-default guarantee from the Government of India.

Payment Mechanism Challenges

The Rating Watch placement stems from multiple instances of non-adherence to the trustee-administered structured payment mechanism. During August and September 2024, there were breaches of T-3 trigger dates for Series VII-D, VIII-B, and VIII-D bonds, where Government of India funding was delayed by one to two days beyond the required timeline.

Under the structured payment mechanism, MTNL must fund the designated account 10 days prior to due dates. When this fails due to liquidity constraints, the trustee invokes the government guarantee, requiring GoI funding by T-3 days before the payment date. While procedural breaches occurred, all bondholders received timely payments as the government funded accounts before actual due dates.

Financial Performance Deterioration

MTNL's operational challenges are reflected in its declining financial metrics. The company's performance shows continued stress across key indicators:

The revenue decline from INR8.2 billion in 9MFY25 to INR5.5 billion in 9MFY26 primarily reflects the decreasing subscriber base. Operating losses widened to INR2.4 billion in 9MFY26 from INR0.7 billion in the previous year period.

Market Position and Competitive Challenges

MTNL's market presence continues to erode in its core Delhi and Mumbai markets. The company's wireline subscriber base totaled 1.5 million across both cities, with market share declining to 13% in Delhi as of December 2025, down from 21% in March 2025. Mumbai market share stands at 15%, compared to 30% in March 2025.

The wireless subscriber base has contracted more severely, falling to 0.2 million in December 2025 from 1.0 million in March 2025. This decline reflects intense competition from players offering advanced 4G and 5G services.

Government Support Structure

Despite operational challenges, the rating reflects strong government linkages. The Government of India directly owns 56.25% of MTNL and has secured approximately 66% of the company's total debt through pre-default guarantees. The tri-partite guarantee agreement between the Department of Telecommunications, debenture trustee Beacon Trusteeship Ltd, and MTNL provides the foundation for the credit enhancement.

The 2022 revival plan approved INR176 billion in long-term bonds backed by sovereign guarantee, of which MTNL has successfully raised the full amount across FY23-FY24. Additional support includes potential capex of INR19 billion as part of the broader INR225 billion allocation for BSNL and MTNL.

Rating Outlook and Sensitivities

India Ratings will resolve the Rating Watch within six months based on two key factors: confirmation of continued funding and operational status of the designated account, and sustained visibility about adherence to structured payment mechanisms. Further delays in funding beyond due dates would remain a key negative rating sensitivity.

The agency continues monitoring the company's ability to maintain the trustee-controlled payment mechanism while awaiting management confirmation on processes for upcoming bond repayments and steps to ensure mechanism adherence in the near to medium term.