MTNL - A Value Buy

Rewind back to 1990s. People in India didn't have basic telephone line. You had to book a line and wait for minimum 3 years for its delivery. My neighbour used to charge Rs. 0.25 for incoming calls since he was the only one who had a line. People used the corporate route to get a line. I think it was 1993 when we had to pay Rs. 500 or so as deposit and finally got a connection. License Raj!

(It is also possible that we got it earlier and I came to know what a telephone is only by that year. Baba got me a toy telephone which made 'tring tring' when keyed. Mitthu, so-called childhood friend, broke it the very next day and he never came to play with me since then.)

Come back to present. Today, the wait is not for the basic telephone, but for Broadband. The waiting period is minimum 1 year. At the end of the month, I still stand in queue to pay the bill.

People continue to pay for fixed land line connections, for broadband and other cellular services MTNL provides. Just a few minutes back, MTNL came out with its FY10Q3 Results. On a sales of 1020.202 crore, it made a loss of 894.953 crore. It is available at Rs. 75 on BSE as of today. Its unbelievable especially if you stand in queue like me and pay the bill.

The share price is tempting, the business is not. Non-aggressive, lack of ambition, complacency and the result says for itself. The only thing that interests me is that the company is sitting on a cash of Rs.76 per share. The reserves are Rs. 181 per share. Also, it has huge land bank. You can actually buy the shares and sell the entire company and make a profit of Rs. 115 per share.

I see the ticker and rub my eyes. I can't believe it and won't buy it. Why?