Mahanagar Telephone Nigam Limited (MTNL) has announced that CARE Ratings Limited has reaffirmed the rating for its bonds at CARE AAA (CE) with a Stable outlook. This rating is supported by an unconditional and irrevocable guarantee from the Government of India (GoI) through the Department of Telecommunications. The rating for MTNL's long-term and short-term bank facilities, however, remains at CARE D, indicating ongoing delays in servicing these obligations due to weak liquidity. The total default amount on these non-guaranteed bank facilities stood at ₹3,208.82 crore as of November 30, 2025. The press release from CARE Ratings dated December 16, 2025, details the rating actions. For the credit-enhanced debt, the reaffirmation of ratings for bond issues follows the consistent track record of timely fund infusion by the GoI per the stipulated Structured Payment Mechanism (SPM). Despite MTNL's loan account with Bank of India being classified as a Non-Performing Asset (NPA) since September 2024, the escrow accounts for servicing the GoI-backed bonds continue to operate without disruption. Conversely, the reaffirmation of ratings for bank facilities at CARE D considers the delays in servicing debt obligations towards bank borrowings due to weak liquidity. This is further impacted by the ongoing decline in the company’s operating performance, a consistently weak financial risk profile, slow progress in the revival package plan related to asset monetization, a heavy interest burden, and high human resource costs. The service agreement executed on November 22, 2024, for a tenure of 10 years between BSNL and MTNL, effective January 01, 2025, where BSNL took over the telecom operations in Delhi and Mumbai, was also noted. BSNL is now responsible for capital expenditure and operational expenditure, ensuring EBITDA-neutral operations for MTNL. CARE Ratings has withdrawn the rating assigned to short-term bank facilities availed by MTNL from IndusInd Bank with immediate effect, as the company did not avail the facility and has no outstanding amount.