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MTNL fixes buyback price at Rs 176 a share

The board of directors of the Mahanagar Telephone Nigam Limited has decided to pay a maximum of Rs 176 per share for buyback from existing shareholders.

It has set aside up to Rs 5.28 billion because it has cleared acquisition of 30 million shares through the buyback route.

The state-owned telecom company's board decided this at a meeting on January 19, sources say.

T O D A Y

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The buyback price of Rs 176 is almost equivalent to the current market price of about Rs 174.30, just a 0.97 per cent premium.

The MTNL board has set a Rs 176 cap on the buyback price, taking into account the likelihood of the scrip firming up as the buyback is announced.

MTNL's paid-up capital could come down from Rs 6.3 billion to Rs 6 billion after the buyback. This will commensurately reflect in a 26.6 per cent jump in earnings per share of the scrip from Rs 17.93 last year to an annualised Rs 22.70.

This is expected to exert an upward pressure on the price of the MTNL scrip.

The telecom services provider in Bombay and New Delhi has announced a 25 per cent increase in net profits for the third quarter of 1998-99. It recorded net profits of Rs 3.4 billion for the October-December quarter, up from Rs 2.72 billion in the same period last fiscal.

The telecom public sector undertaking improved its income from services 10.67 per cent from Rs 11.8 billion in the third quarter 1997-98 to Rs 13.06 billion, Chairman and Managing Director S Rajagopalan has said.

The results are bolstered by a 161 per cent vault in other income from Rs 214.3 million to Rs 559.9 million.

Rajagopalan said the PSU would commercially launch Internet services in the two cities on February 9.

Its Internet access charges will be at a 15 per cent discount to the rates of Videsh Sanchar Nigam Limited. MTNL proposes to charge subscribers Rs 2,550 for 100 hours of Internet access, Rs 5,525 for 250 hours and Rs 8,500 for 500 hours access.

In comparison, VSNL's rates are Rs 3,000, Rs 6,500 and Rs 10,000 respectively. The international carrier is expected to react with similar price cuts. Both MTNL and VSNL charge Rs 500 for registration.

On a question on buyback of shares by MTNL, Rajagopalan said the proposal was "on track". Senior Finance Adviser S D Saxena said the company needs at least 55 days to go ahead with the exercise and could complete the buyback.

MTNL is awaiting certain clearances and clarifications from the Central Board of Direct Taxes and Securities and Exchange Board of India, he added.

Rajagopalan said that the MTNL is considering listing its global depository receipt on the New York Stock Exchange. He said a final decision on the listing would be taken in a few months time.

"The listing will help in a better valuation and more international participation," a senior official said. The MTNL GDR is currently listed on the Luxembourg stock exchange.

Commenting on the Rs 7 billion GDR proceeds (raised through an issue in November 1997) MTNL has parked with the London branch of the State Bank of India. Rajagopalan said the company might start dipping into the funds by April.

This, he added, depends on the investment plans next year.

- Compiled from the Indian media

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