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3. MTNL

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VoicenData Bureau
New Update


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Factsheet

CEO: Narinder Sharma



Area of Operation: Fixed, cellular and Internet services


Address: 12th Floor, Jeevan Bharti Tower 1, 


124 Connaught Circus, New Delhi-110 001


Tel: 332 2292


Fax: 331 7344


Web site: www.mtnl.net.in  




SWOT

STRENGTH
  • High on cash 
  • No real competition in core activity in the immediate future

WEAKNESS

  • Slow on implementation
  • Poor marketing

OPPORTUNITY

  • Limited mobility market

THREAT

  • New licensees 

For the first time since 1995, Mahanagar Telephone Nigam Ltd (MTNL) slipped

from No. 2 to the No. 3 position due to the entry of BSNL at the top of V&D

100 ranking.

In the FY 2000-01, MTNL’s sales increased to 10.6 percent, with a sales

turnover of Rs 5,732 crore against a figure of Rs 5,182.2 crore in the FY

1999-2000. The net profits, however, soared by 52 percent to reach Rs 1,653.52

crore, which is more than the turnover of some of the Top 10 companies in

V&D 100. The operating profit margin also increased from 37.5 percent in the

FY 1999-2000 to 40.5 percent in the FY 2000-01. MTNL now enjoys tax benefit

under Section 80 (IA) of the Income Tax Act, 1961.

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On the face of it, MTNL’s growth of 10.6 percent looks much better than the

previous year’s sluggish growth of 2.9 percent. But the fiscal 2000-01 was not

very significant for MTNL, as it did little to prepare itself for future

competition. In Mumbai, it started feeling the heat of competition from Hughes

Tele.com while Delhi still remains a monopoly market for it. MTNL is looking at

a 10 to 11 percent rise in sales in the current year, almost the same as that

achieved in 2000-01.

In all the new areas that MTNL ventured into, the story has been

unimpressive. While its Internet services growth remained sluggish, the cellular

service that it launched in Delhi and Mumbai under the brand name Dolphin,

bombed miserably. As far as strategic moves are concerned, MTNL did bid for

fixed service license in ten circles and was planning to bid for cellular

services as well, but the government rejected the plan. The only silver lining

is MTNL’s plan to provide fixed service in Bangladesh, in a JV with WorldTel,

which bagged the license. Not much is known about its JV with RailTel, which

would enter the long distance market, if the government approves the proposal.

MTNL has committed a provision of 3.3 lakh net switching capacity and 50,000

limited mobility connections during 2001-02, in a MoU signed with DoT. The

company plans to invest Rs 10,000 crore in the next five years, out of which

about 80 percent will be met from its internal resources.

The government has announced its plan to reduce its stake to 26 percent in

MTNL by the end of 2001-02. The government, currently, holds 56 percent stake in

the company, while the GDR accounts for 11 percent. About 14 percent is held by

foreign institutional investors and NRIs, and the rest is owned by the Indian

investors.

MTNL, this year, has mammoth tasks ahead. On the one hand, it has to go ahead

with its disinvestment plans. On the other hand, it has to tackle competition in

both areas–where it is an incumbent as well as a challenger. To start with, it

has to move faster.

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