MTNL Bonds Retain CARE AAA (CE); Stable Rating, Bank Facilities CARE D
CARE Ratings reaffirmed MTNL's bonds at CARE AAA (CE); Stable, backed by a GoI guarantee. However, bank facilities remain rated CARE D due to liquidity issues and debt servicing delays totaling ₹3,208.82 crore as of November 30, 2025. BSNL has taken over MTNL's operations in Delhi and Mumbai from January 1, 2025.
The reaffirmation of the 'CARE AAA (CE); Stable' rating for bonds provides some stability for debt holders relying on the sovereign guarantee. However, the 'CARE D' rating on bank facilities indicates a high probability of default on these obligations, which will impact the company's ability to raise further unsecured debt and its overall financial flexibility.
While the credit-enhanced debt rating remains strong due to government backing, the company's standalone bank facilities continue to be rated 'D', reflecting significant ongoing financial distress and payment delays. The overall sentiment is neutral as it captures both the positive credit enhancement and the negative standalone credit quality.
Mahanagar Telephone Nigam Limited (MTNL) has announced that CARE Ratings Limited has reaffirmed the rating for its bonds at CARE AAA (CE) with a Stable outlook. This rating is supported by an unconditional and irrevocable guarantee from the Government of India (GoI) through the Department of Telecommunications. The rating for MTNL's long-term and short-term bank facilities, however, remains at CARE D, indicating ongoing delays in servicing these obligations due to weak liquidity. The total default amount on these non-guaranteed bank facilities stood at ₹3,208.82 crore as of November 30, 2025.
The press release from CARE Ratings dated December 16, 2025, details the rating actions. For the credit-enhanced debt, the reaffirmation of ratings for bond issues follows the consistent track record of timely fund infusion by the GoI per the stipulated Structured Payment Mechanism (SPM). Despite MTNL's loan account with Bank of India being classified as a Non-Performing Asset (NPA) since September 2024, the escrow accounts for servicing the GoI-backed bonds continue to operate without disruption.
Conversely, the reaffirmation of ratings for bank facilities at CARE D considers the delays in servicing debt obligations towards bank borrowings due to weak liquidity. This is further impacted by the ongoing decline in the company’s operating performance, a consistently weak financial risk profile, slow progress in the revival package plan related to asset monetization, a heavy interest burden, and high human resource costs. The service agreement executed on November 22, 2024, for a tenure of 10 years between BSNL and MTNL, effective January 01, 2025, where BSNL took over the telecom operations in Delhi and Mumbai, was also noted. BSNL is now responsible for capital expenditure and operational expenditure, ensuring EBITDA-neutral operations for MTNL.
CARE Ratings has withdrawn the rating assigned to short-term bank facilities availed by MTNL from IndusInd Bank with immediate effect, as the company did not avail the facility and has no outstanding amount.
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Mahanagar Telephone Nigam Limited filed this with the NSE as a statutory disclosure, categorised under credit ratings. It is a primary document, not a recommendation, and the desk marks it medium impact: worth reading, rarely worth acting on by itself.
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See the model portfoliosA plain-language summary of a public exchange filing by Mahanagar Telephone Nigam Limited. Read the original for the full detail.