According to newspaper reports, Mahanagar Telephone Nigam Limited (MTNL) is planning to set up a payment gateway to facilitate e-commerce transactions between traders and customers. It is in talks MasterCard for use of credit cards over the net. The company is said to be in talks with the Life Insurance Corporation (LIC) for offering this service.
MTNL (FY99 Revenues: Rs 52.47 bn), a public sector company, is a franchise of the Department of Telecom. The company has a 15-year telecom license to operate in New Delhi and Mumbai until the year 2013.
MTNL is focussing on its Internet and related businesses, which currently generate only 10% of its topline. Infact, the company has stated that it plans to increase the contribution of this segment to 25% of topline by 2002. In view of its fixed line telephony business having come under pressure due to rising competition, it makes sense for the company to venture into a high growth related area like Internet. Infact the company already offers an ISP service. It now plans to offer more value added services like payment gateways that will generate higher margins for the company.
MTNL has recently stated that it plans to convert itself into a multi media company by venturing into telecom software, content and value added services. The company's initiatives are in line with its stated objectives.
A prime concern for the company would be a threat to its fixed line telephony services. Its venture into mobile services too has been mired in controversy. As a consequence, MTNL's main line of business continues to be under pressure. Added to this is the rising intensity of competition in the Internet segment. In order to stay competitive, the company would have to cut costs and improve service levels. This could prove to be a stumbling block for this public sector unit.
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