Top 10: 5 - MTNL: GSM Shows The Way

VoicenData Bureau
New Update

State-owned Mahanagar Telephone Nigam (MTNL) posted a revenue ofÂ

Rs 5,786 crore during FY 2005-06, as against Rs 6,084 crore in

FY 2004-05. The telecom comapny earned a net profit of Rs 578 crore during the
FY 2005-06, as compared to Rs 938 crore during FY 2004-05, a decline of 61%.

This is worth an applause, considering the rapid decline in tariff and other

adjustments. The total number of phone connections went up by 15%. The

subscriber base went up from 5.15 mn during FY 2004-05 to 5.92 mn during FY



The year saw significant increase in GSM subscriber base for MTNL. From

881,696 in FY 2004-05, it almost doubled to 1,941,155 in FY 2005-06, a whopping

120% increase.  Despite being a late

entrant in the GSM market, MTNL managed to increase its market share to 17%

during FY 2005-06.


Area of operation: Fixed

Services, Mobile Services, Internet Services, Enterprise Data Services

Jeevan Bharti Tower-I, 12th Floor, 124, Connaught Circus, New Delhi —110001

Phone: +91-11-23719020

Fax: +91-

This was also reflected in the income from GSM services, which went up from

Rs 2,874 mn to Rs 5,610 mn. The broadband subscriber base grew to 211,935 during

FY 2005-06, almost 40 times over 5,374 subscribers registered during FY 2004-05.


On the fixed line front, MTNL's subscriber base declined to 3,821,252, as

compared to 4,015,173 during 2004-2005. This impacted MTNL's income from the

fixed phone service which got reduced to Rs 52,494 mn in FY 2005-06 from Rs

55,924 mn during FY 2004-05. Other income went up from Rs 4,917.2 mnÂ

to Rs 5,361.4 mn,  which was

primarily on account of interest on refund of income tax deposited in the

previous  years. Thanks to the implementation of VRS, the staff

expenses saw a reduction. Some progress was also made in its cost control


The company invited tender for increasing its bandwidth to cater to in-house

demand as well as leased/dedicated circuits of various capacities for Delhi and

Mumbai from the companies having license from DoT. Despite rhetoric on the

merger of MTNL and BSNL, nothing concrete emerged.  


  • Earned a net profit

    of Rs 578.6 crore during FY 2005-06

  • Whopping 105%

    increase in GSM subscriber base with 17% market share in Delhi and


  •  Fixed line

    subscriber base declined

  • Broadband

    subscriber base grew to 211,935 during FY 2005-06, almost 40 times

    over the previous year


MTNL also showed its interest in IPTV, as it began trials.Â

The company continued to remain committed on the rollout of 3G services

by giving an order of 2 mn lines for Mumbai. The company also gave Motorola an

expansion order for 800,000 GSM lines.

The company also set up an offline system for inter-operator billing system.

Also the validation and deployment continued during the last year. Other

important development of the year was MTNL managing to clear all the waiting

list except for technically non-feasible areas.

'IPTV services

will boost demand for fixed lines'

How did MTNL perform

during 2005-2006?

Whatever actions we had taken in 2003-04 and 2004-05, now has started

bearing fruits. I am hopeful that in the coming year, it will be much


Our first achievement

during the last year was that in the most competitive markets of Delhi and

Mumbai, we have beaten all operators in terms of net additions of

customers in the mobile telephony space. We gave 10.6 lakh new connections

to our customers against our nearest rival Airtel, who gave 9.5 lakh.

Hutch gave 9 lakh connections. Our market share, which was 5%Â

in 2003-2004, has increased to almost 18%.


RSP Sinha

Do you think you

failed in your broadband targets?

Broadband was the biggest success story for us. We started providing

broadband services on ADSL2 plus almost at the same time as in the US. We

were able to give better speed over a longer area. Our broadband

subscribers during 2005-2006 stood at 2.28 lakh. It is true that we did

not meet our targets. The main reason was the under-estimation of demand

on our part. We were giving 1,000 connections per day. The response to our

services was overwhelming and as a result, we fell short of CPEs which

caused delays in providing connections.

Being a PSU, we can't

buy products off the shelf as the private operators, and have to go

through a procurement process, which resulted in delays. It is very

unfortunate that we have a waiting list in Delhi and Mumbai. CPE shortage

has been taken care of and we hope that by July, we will clear the entire

waiting list. We not only succeeded but we exceeded the expectations of

the people.

What are your views

on landline surrender?

The surrender of landline phone is not a new phenomenon. Wherever the

monopoly has been taken away, there is always bound to be some surrender

of fixed line in order to have some diversity due to multiple options

available to consumers. The only issue was that whatever loss was taking

place in fixed line should have been compensated by GSM or CDMA customers.

But MTNL got the GSM license very late. So the lead period was available

to the private operators who were able to get the largest market share.

The fixed line

surrender has gone down. But if you need our broadband connection, you

also need fixed line connection.

What is the progress

on IPTV front?

I think there will be a huge demand for fixed line the moment we

launch our IPTV services. The technology we are trying to bring in is new.

IPTV throughout the world is working on MPEG2, which consumes larger

bandwidth.  However, the MPEG4

technology, which is still in the process of getting matured, is our

choice.  So we are ahead of

the US and other countries. We have tied up with content providers, and

are planning to launch the service in July.

What is the status

on 3G services?

The tender is almost on the verge of finalization. We are going for 2

mn lines each for Delhi and Mumbai, out of which 75,000 is for 3G. From

our side, we are ready but we are awaiting government allocation of 3G


MTNL's most important challenge for the year 2006-07 will be to meet the

broadband targets and make fixed line services more attractive. It has also

shown a forward looking attitude by starting local dialing between Delhi and

Mumbai. With unbundling being talked about, it would be interesting to see how

the comapny deals with the competition. The launch of 3G services is also in the

offing, depending on spectrum allocation. The year 2007 is likely to see MTNL

launch its IPTV service.