Credit Rating

MAHANAGAR TELEPHONE NIGAM LIMITED (A GOVERNMENT OF INDIA ENTERPRISE) CIN L32101DL1986GOI023501 Registered and Corporate Office: Mahanagar Doorsanchar Sadan 5th Floor, 9 CGO Complex, Lodhi Road, New Delhi - 110 003. Tel: 011-24319020, Fax: 011-24324243, Website: www.mtnl.in, Email: mtnlcsco@gmail.com MTNL/SECTT/SE/2026 August 27, 2026 To, To, BSE Limited, National Stock Exchange of India Limited (NSE) Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Exchange Plaza, Plot No. C/1, G Block Bandra Kurla Mumbai – 400 001. Complex, Bandra (East), Mumbai – 400 051 Scrip Code: 500108 Scrip Symbol: MTNL SUB: COMPLIANCE OF REGULATION 30 & 51 OF SEBI (LODR) REGULATIONS, 2015 - DISCLOSURE OF EVENTS OR INFORMATION – RATING GIVEN BY M/s CRISIL RATINGS LIMITED TO BONDS ISSUED BY MTNL – SUBMISSION OF RATING RATIONALE - reg Dear Sir, In compliance of Regulation 30 & 51 of SEBI (LODR) Regulations, 2015, this is to inform you that M/s Crisil Ratings Limited has given its Rating Rationale on Bonds Issued by MTNL dated August 25, 2026. Copy of aforesaid Rating Rationale is attached herewith. Kindly take the same on record. Thanking You Yours Faithfully, (RATAN MANI SUMIT) COMPANY SECRETARY Rating Rationale August 25, 2026 | Mumbai Mahanagar Telephone Nigam Limited Rating continues on 'Watch Negative' Rating Action Regulator Name Of Instrument Rating Outstanding with Outlook of instrument Rs.20 Crore Non Convertible Crisil AAA (CE) /Watch Negative (Continues on Debentures 'Rating Watch with Negative Implications') Crisil AAA (CE) /Watch Negative (Continues on Rs.6500 Crore Bond SEBI 'Rating Watch with Negative Implications') Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. 1 crore = 10 million Refer to Annexure for Details of Instruments & Bank Facilities Detailed Rationale Crisil Ratings has continued its rating on the bond and non-convertible debentures (NCDs) of Mahanagar Telephone Nigam Limited (MTNL) on 'Rating Watch with Negative Implications'. The rating was placed on watch negative on September 11, 2024, following the non-adherence to the structured payment mechanism for government-guaranteed bonds (for ISINs INE153A08139, INE153A08162 and INE153A08188). Though the bond obligations were met on the due date, the payment mechanism was not adhered to as specified in the bond documents. While the structured payment mechanism specifies the account should be funded by the T-3 date by the guarantor (the Government of India), there was a delay of 1-2 days in funding the designated account beyond the T-3 date. Crisil Ratings has noted the consistent adherence to the trustee-administrated structured payment mechanism for timely funding of the designated escrow account by the government towards payments for governement-guaranteed bonds. Crisil Ratings has observed that for all the subsequent interest payments (from the rating rationale dated September 11, 2024, where the rating was placed on watch negative), there has been adherence to the stipulated structured payment mechanism as per the timeline defined in the bond documents. There was a breach of T-10 days wherein the funds were not deposited in the designated escrow account 10 days prior to the due date by MTNL owing to liquidity challenges at the company and hence, on the T-8 day, the trustee invoked the guarantee. However, the government has been consistently funding the designated escrow account on or before the T-3 trigger date. Non-adherence to the structure poses a risk to the servicing of the bonds issued by MTNL. Crisil Ratings will continue to monitor the adherence to the stipulated T-structure payment mechanism. Crisil Ratings awaits confirmation from MTNL on the process to be followed for ensuring adherence to the structured payment mechanism, but has noted the adherence to the structure from September 21, 2024. Crisil Ratings will continue to monitor developments in regard to any such process and sustained adherence to the stipulated T-structure payment mechanism will be a trigger to resolve the watch. Instances of non-adherence to the structured payment mechanism in upcoming repayments may lead to a downgrade of the rating. Crisil Ratings has also noted that MTNL’s loan account with Bank of India (BOI; ‘Crisil AA+/Stable’ on Tier II Bonds (Under Basel III) of Rs 6,800 crore/Crisil AA/Stable on Tier II Bonds (Under Basel III) of Rs 2,852 crore/Crisil A1+’) slipped into non- performing account (NPA) category on September 4, 2024. All the escrow accounts pertaining to servicing of the government- guaranteed bonds are maintained with BOI. Based on discussion with the MTNL representatives as well as bankers, Crisil Ratings understands that the operational status of the escrow accounts will not be impacted if the NPA status of the loan account continues. The rating continues to be supported by the credit enhancement provided by the unconditional and irrevocable guarantee from the Government of India through the Department of Telecommunications, Ministry of Communications, and the trustee- administered payment mechanism. Analytical Approach The rating is fully driven by the unconditional and irrevocable guarantee provided by the Government of India and the trustee- administered payment mechanism. The rating also factors in the government’s majority stake in MTNL. Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. Key Rating Drivers - Strengths Credit enhancement provided by comprehensive, unconditional and irrevocable guarantee from the Government of India The rating is based on the strength of the credit enhancement facility provided by the unconditional and irrevocable guarantee from the Government of India through the Department of Telecommunications, Ministry of Communications. Key Rating Drivers - Weaknesses Instances of non adherence to the timeline of the structured payment mechanism The bonds issued by MTNL are backed by an unconditional and irrevocable guarantee from the central government through the Department of Telecommunications, Ministry of Communications, for the servicing of the entire issue (principal and accrued interest) throughout the tenure. The pre-default structured payment mechanism between MTNL, the government and the debenture trustee was designed to ensure adequacy of funds in the designated account much before the actual payment date (T-10 days). The structured payment mechanism defines multiple timelines with T-3 as the ultimate deadline for the government to transfer the requisite funds for majority of the bonds. Though timely payment to investors is being made (as of date), there were three instances in the second quarter of fiscal 2025 (for ISINs INE153A08139, INE153A08162 and INE153A08188) when the payment framework was not adhered to as specified. In the said three instances, there was a delay of 1-2 days in funding the designated account beyond the final timeline of T-3 stipulated in the structured payment mechanism. Crisil Ratings has observed that there has been consistent adherence to the stipulated structured payment mechanism as per the timeline defined in the bond documents for all the subsequent interest payments (from the rating rationale dated September 11, 2024, where the rating was placed on watch negative). While there was a breach of T-10 days wherein the funds were not deposited in the designated escrow account 10 days prior to the due date by MTNL owing to liquidity challenges at the company, resulting in the trustee invoking the guarantee on the T-8 day, the government has been consistently funding the designated escrow account on or before the T-3 trigger date. For ISINs INE153A08147, INE153A08089, INE153A08097, INE153A08170, INE153A08121, INE153A08113, INE153A08139, INE153A0 [Showing first 8,000 characters — download PDF for full document]