The stock of the state-run telecom services provider in the Mumbai and Delhi circles was up by 1.4% at Rs 90.40 in mid-morning trades on the BSE. It hit a high of Rs 91.20 and a low of Rs 89.30. 223,000 shares changed hands on the counter in slightly over one-and-half-hours of trading.

The MTNL scrip rose for the third straight session. On Monday, it surged by 4.7% to Rs 89.30 on the back of the Telecom Regulatory Authority of India's announcement of the hike in basic telephony rates and rentals. A day earlier i.e. last Friday (24 January 2003), the scrip gained 1.1% to Rs 85.25 even as the company announced a sharp fall in its Q3 net profit.

The current surge on the MTNL counter comes after the scrip hit a multi-year (more than 9 years) low of Rs 82.20 on 14 January 2003.

Last Saturday, the Trai announced that monthly rentals for fixed line telephones will be hiked by 11% to 12%. The telecom regulator has also reduced call size (pulse rate) to two minutes from three minutes besides slashing free calls by half to 30. Also, the number of cheap calls have been reduced by 40%. Urban users making 500 calls a month, will now have to pay Rs 784 a month as compared to Rs 690 earlier. The increased rentals will be effective from 1 April 2003.

MTNL is engaged in basic telephony services in the two metros of Mumbai and Delhi. It also offers Internet and cellular services.

Trai has also announced that all incoming calls will be free. Calls from a fixed line to a cell phone will cost more. While in metros, it will be 80 paise per minute, in other cities, it will be Rs 1.20 a minute. The call rates of limited mobility phones are likely to go up as wireless-in-local-loop operators will have to pay terminating charges of between 30 paise to 60 paise a minute to call the terminating network.

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 14.6 billion) from Rs 1,650.11 crore (Rs 16.5 billion) in DQ 2001.

According to a capitalmarket.com poll of six telecom analysts, MTNL was expected to post a net profit between Rs 265.5 crore (Rs 2.65 billion) to Rs 301 crore (Rs 3.01 billion) and net sales in the range of Rs 1,476.5 crore (Rs 14.7 billion) and Rs 1,525 crore (Rs 15.2 billion).

The Government of India holds 56.25% of the total equity capital of Rs 630 crore of MTNL, while institutions and the public hold 40% and 2% respectively.

BSE Code: 500108