MTNL shares surge over 6% on govt's financing plan

MTNL's stock went up by over 6% in intraday trading today, and was trading at Rs 22.30, up from Rs 21 at previous close. At 2142, the company's scrip was trading at Rs 21.50, up 2.38%. 

The company's stock surged on the news that the government will be extending financial help of 627.20 crore spent on for 800 MHz CDMA spectrum that the two companies surrendered. 

The Cabinet has approved an extension of financial support of Rs 458.04 crore to MTNL and Rs 169.16 crore to BSNL, totalling Rs 627.20 crore on surrender of 800 MHz CDMA carriers in few of their circles, the source added.

BSNL has surrendered spectrum (one carrier of 1.25 MHz each) for 4 circles and MTNL in Delhi and Mumbai (two carriers of 1.25 MHz each).

The source further said there has been a gain for the government as the sale of this spectrum for 20 years has yielded a revenue of Rs 3,997.61 crore to the government, which otherwise would not have been available in case the spectrum was not put to auction.

"The surrender of spectrum by BSNL and MTNL enhanced contiguity of spectrum in some licensed service areas thereby enabling higher prices obtained in auction," the source said.

Contiguity of spectrum enhances the special efficiency, and usability of airwaves with different technologies has an impact on competitive bidding through e-auction.