Rank 3: MTNL: Staying Put

Fiscal 2001-02 was significant for MTNL in many ways. It recorded a turnover

of Rs 6,147.1 crore, as income from services registered a growth of 6.3 percent

over the previous fiscal’s income of Rs 5,784.6 crore. Despite registering a

growth in overall revenues, the company registered a negative growth of 5.27

percent in profits. As compared to the previous fiscal, when its earned profits

of Rs 1,540.2 crore, this year the profits stood at Rs 1,458.8 crore.

Two major factors contributed to the decline in profits–the second phase of

tariff re-balancing and the huge tax liabilities that MTNL had to bear with due

to its license fee obligations to the government. Last year, profit before tax

was Rs 1,720.2 crore as against this year’s Rs 1,985.8 crore.

Fiscal 2001-02 saw the formal launch of its WLL services. The service was

particularly popular in Mumbai which saw the subscriber base shoot up to 50,000

by the end of the fiscal from a base of just 500 subscribers at the beginning of

the fiscal. The installed capacity of WLL in the city stood at 55,000

subscribers at the end of the fiscal, up from 1,000 subscribers the previous

year.

The Delhi market’s response–where Garuda’s launch happened after Mumbai–was

relatively more conservative. It started with a subscriber base of 7,000,

notching up 19,000 subscribers by the end of the fiscal.

In GSM, although the company did flounder in the beginning, it managed to

catch up in Mumbai marginally. From a base of 8,000 subscribers at the beginning

of the fiscal, it managed to pool in 80,000 subscribers by the end of the

fiscal. In Delhi, the number of subscribers increased from 10,000 to 19,000 by

the fiscal end. Both the cities have an installed capacity of 1 lakh each for

their GSM services. During the next fiscal, the company expects to add 200,000

subscribers.

MTNL’s sluggish growth in GSM services is particularly ironic given the

fact that the reduced tariffs in GSM, was triggered by MTNL’s high-profile

launch of Dolphin, which was instrumental in expanding the cellular market.

Moreover, at a time when SMS was pushing the growth of cellular services, MTNL

failed to make a dent by pitching for the new offering.

MTNL TURNOVER FACTSHEET Chairman and MD : Narinder Sharma Area of Operation : Basic, cellular, Internet, WLL, IN services, leased lines No of Employees : 60,000 Address : MTNL, 12th floor, Jeevan Bharti Tower-1,  124, Connaught Circus,  New Delhi 1100 01 Tel : 011-371 9020 Fax : 011-331 4243 S W O T Strength  Strong cash flow, Large network Weakness Poor customer-care orientation Opportunity Can leverage on its existing network and customer base Threat  Private operators

Although the company launched its pre-paid card Trump during the fiscal, it

failed to make an impact primarily for the lack of reach among potential

subscribers. By mid-year, MTNL realized it had to spruce up its marketing act

and undertook the task of rebuilding its brand. It initiated the process of

appointing a single agency to coordinate its entire media campaign. It also

undertook the task of increasing its reach by appointing as many franchisees as

possible.

The company set up outsourced call centers in both the metros to cater to

customer queries.

In basic services, MTNL continued to dominate the metros.

This fiscal, MTNL has clearly set its agenda on wireless services. The year

would see investments in expanding its CDMA and GSM services to the tune of Rs

1,000 crore. As far as fixed line services are concerned, the company would

invest Rs 200 crore in upgrading its network.