MTNL

Fiscal 1997-98 was hectic at

MTNL. Launching new value-added services, trying to venture into cellular services,

evaluating the possibilities of bidding for the remaining circles in the event of tender

declarations, trying to muster support to allow it to operate basic services in the

remaining two metros, trying to form a JV with ITI and TCIL, and many more. The intentions

were clear. To establish MTNL as a premier total telecom solutions provider. One of its

important strategies to this effort was establishing a marketing service department in

November 1997. The punch line was—promote brand equity, value-added services, and

awareness. An important realization on the part of MTNL was to make its staff aware of the

importance of belonging to a big telecom company and to bring about a change in their

attitude.

Thanks to this

approach—perhaps partially—it successfully reduced the size of the waiting list.

And this had a two-fold effect on its profits. One, the interest costs declined to Rs

82.32 crore from Rs 147.62 crore in the previous year due to lower borrowings. The second,

reduction in interest payable on deposits at the time of applying for a phone connection.

Adding of 3.9 lakh lines to its

existing capacity ensured higher revenues and profits for the company. Its net profit grew

by 15 percent to Rs 1,073.02 crore in 1997-98. Net profit margins were at 23.44 percent as

against 23.14 percent in 1996-97. And it posted a total turnover of Rs 4,645.54 crore for

the year ended 31 March 1998. Another important thing that MTNL did was repaying a lot of

corporate loans. This helped it in reducing the interest burden too. During the year, MTNL

increased its equity capital to Rs 630 crore from Rs 600 crore in 1996-97, primarily due

to the GDR issue representing 70 million shares at an offer price of $11.958 per GDR.

During the last fiscal, MTNL

experimented with the "phone-on-demand" scheme in South Mumbai. The company is

confident of providing phone-on-demand, this year too, though not in all areas. The

response to ISDN was good and it expects to have 3,000 ISDN subscribers by the end of this

fiscal.

This year onwards, MTNL will

focus on marketing and improving services. MTNL is further expected to strengthen its hold

on WILL technologies and, certainly if allowed, will make a joint bid with TCIL for the

Tamil Nadu and West Bengal circles in the fourth round of bidding for basic services. And

more so when the government seems keen to allow the revenue-sharing model and not the

up-front licence fee method.

In its WILL deployment, MTNL may

invite tenders for a 50,000-line exchange, which will most likely be based on Code

Division Multiple Access (CDMA) technology in Mumbai. It may be remembered that it already

has a 1,000-line experimental system operational in Delhi (Bhikaji Cama Place). And

intends to raise the existing capacity to 10,000.

This year will see the first step

in the direction of MTNL’s restructuring.



And, it will be an important exercise being undertaken to ward off competition and
streamline costs. Global consultant McKinsey has been appointed to advice MTNL on

restructuring. It is likely to take place in three phases and cover material management,

financial accounting, and organizational set-up. It will have to be seen how MTNL will

manage to be a flat-structured organization, without creating unrest and protests.

Recently, MTNL has won the

verdict from the High Court to start cellular services in Mumbai and Delhi. The company is

actively pursuing it and hopes to start the service by March 1999.