MTNL advanced on Tuesday on good buying support from domestic institutions.

The stock of the state-run telecom services firm was up by 3.80% at Rs 99.70 on the BSE. A relatively higher volume of over 176,000 shares was recorded on the counter by 14:20 IST. In the last five sessions, the stock has risen by 10.5% from Rs 90.25 on 25 March 2003.

As per market buzz, the rally on the Mahanagar Telephone Nigam counter was due to buying support from domestic funds since the last few sessions. The investment in the stock is believed to be long-term in nature i.e. for over 1or 2 years.

Meanwhile, analysts said there has been no change in the company's fundamentals so far. However, the stiff competition and changing scenario in the telecom sector is taking its toll on the company. MTNL is engaged in basic telephony services in the two metros of Mumbai and Delhi. It also offers Internet and cellular services. MTNL's mainstay is basic services, where the company is witnessing stiff competition from private operators. Analysts feel that unless MTNL goes for aggressive marketing to take on its competitors, it will be difficult for the company to prosper.

Earlier, there were reports that MTNL's privatisation may take place sooner than expected, but nothing has materialised so far. The Government of India holds 56.25% of the total equity capital of Rs 630 crore (Rs 6.3 billion) of MTNL, while institutions and the public hold 40% and 2% respectively.

Recently the Group of Ministers have cleared the proposal to raise foreign equity ceiling for basic telecom and mobile services to 74% from the current 49%.

On 23 January 2003, MTNL announced dismal Q3 (ended 31 December 2002) results - a drop in net profit of 33.8% to Rs 217.06 crore (Rs 2.17 billion) as compared to Rs 328.01 crore (Rs 3.28 billion) in the corresponding period of the previous year. Net sales decreased by 11.33% to Rs 1,463.15 crore (Rs 14.63 billion) from Rs 1,650.11 crore (Rs 16.5 billion) in DQ 2001.

BSE code: 500108