MTNL bucked the weak market trend on Friday on sustained buying support from institutions.

The scrip of the state-run telecom services provider was up by 1.76% at Rs 101 on the BSE. A volume of over 160,000 shares was recorded on the counter by 12:22 IST. The scrip has risen by 12.22% from Rs 90 on 24 April 2003.

Dealers' said the Mahanagar Telephone Nigam stock rallied on sustained buying support from institutions. As per market buzz, brokerage Salomon Smith Barney has been active on the counter since the last few sessions, acting on behalf of Capital International.

Dealers said that MTNL, which is cash-rich, may come out with a huge dividend.

Meanwhile, analysts said that institutions are accumulating the stock as the company's revised tariff charges are expected to improve its profitability. With the implementation of inter-connect charges regime from 1 May 2003, the whole telecommunication services scenario in India has changed.

MTNL has also reset tariffs with effect from 1 May 2003 by slashing the number of free calls, retaining the three-minute pulse for local calls and keeping unchanged overall monthly rentals. The company has offered three alternative packages to its basic services subscribers.

MTNL's mainstay is basic services in the two metros of Mumbai and Delhi, where the company is witnessing stiff competition from private operators. Also, it has entered a new services line - cellular services - where there is already stiff competition.

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 of MTNL, while institutions and the public hold 40% and 2% respectively.

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

MTNL has also come out with its fourth quarter as well as full year results for the period ended 31 March 2003. For Q4, the company recorded a huge 56% fall in net profit to Rs 183.62 crore (Rs 1.83 billion) on a 2% drop in sales to Rs 1,356.49 crore (Rs 13.56 billion). For FY 2002-03, the company posted a 31% fall in net profit to Rs 897.50 crore (Rs 8.97 billion) on a 6% drop in sales to Rs 5,783.73 crore (Rs 57.83 billion).

BSE code: 500108