"MTNL is also planning to enter long distance telephony and cellular in a very big way. This service is likely to be launched in November 2000." - Views on News from Equitymaster

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  • Sep 28, 2000 - "MTNL is also planning to enter long distance telephony and cellular in a very big way. This service is likely to be launched in November 2000."

"MTNL is also planning to enter long distance telephony and cellular in a very big way. This service is likely to be launched in November 2000."

Sep 28, 2000

Mr. S. Sundresan is the full time Director - Finance of Mahanagar Telephone Nigam Ltd. He has served in both, private and public enterprises and was also on the Board of Directors for HUDCO. Mr. Sundresan is a chartered accountant by profession and posse's wide experience in the field of finance. He has been instrumental in many of the initiatives at MTNL. In an interview with equitymaster.com, Mr. Sundresan spoke at length of the various initiatives being undertaken at MTNL to make it more competitive in the emerging paradigm.

EQM: The telecom sector has been in the limelight this quarter. What are your views on the existing industry scenario? How do you see the sector evolving over the next 3-5 years?

Mr. Sundresan: The telecom sector is going to witness a very big change in the next 3-5 years. With the Government's decision to allow more competition in the sector the entire telecom industry would be driven by market forces.

This will be similar to what happened in the financial markets wherein the interest rates are now determined on the basis of demand and supply. One can expect similar happenings in the telecom sector where the subscriber is going to play a very important role in tariff fixation, as he will have a choice of service providers.

To face the challenges of tomorrow MTNL is drafting a new business plan called ‘Vision 2005”.

EQM: Survival in the free markets call for lean organizations, MTNL has 60,000 plus employees, how does it plan to remain competitive with this excess weight?

Mr. Sundresan: The human strength is the greatest strength for MTNL. Though MTNL has 60,000 employees it is no way a constraint to the company, as each employee plays an effective role in the company's development. We do not view this as a threat in any regard.

However, MTNL is taking steps to reduce its work force by introducing a voluntary retirement scheme (VRS). MTNL has also taken a decision to freeze recruitment at the lower levels. With the retirement age being increased from 58 to 60 years all the employees who were to retire automatically got an extension of two years. These employees are now likely to retire in the current year.

It is expected that in another three years the staff strength of MTNL would come down by a great extent. One must reiterate that MTNL values its human resource and does not consider it a disadvantage to the company. We consider human asset as the most valuable asset in the company.

EQM: Mumbai & Delhi are the most lucrative circles in the country. However, they are matured markets with high penetration levels. What does MTNL see as its growth drivers in fixed line telephony?

Mr. Sundresan: MTNL still feels that the penetration level is very low in the Mumbai & Delhi circle. It believes that by providing various value-added services in fixed-line telephony the company would be able to increase its business. MTNL is planning to replace its copper cables with optic fibre up to the customer's doorstep. The company also plans to introduce ADSL facility in its services.

EQM: MTNL faces competition from private basic telephony service providers in its two circles. Hughes Tele in a year of operations has captured 4% of the corporate client market. How does MTNL plan to retain market share?

Mr. Sundresan: MTNL welcomes competition. It considers the competition to be an opportunity, as it increases the efficiency of business processes and facilitates better service to the customers.

All the major customers in Mumbai are with MTNL and they will continue to be with MTNL in the years to come. We would be able to retain our customers by improving technology and customer service quality.

On the customer service front we have undertaken several initiatives for bill collection. We are in the process of creating new channels for bill payments. These include bill collection from the customer's doorstep. MTNL is in discussion with many of the banks to provide payment of telephone bills through ATMs. The company has tied up with Master Card for payment of telephone bills through Indian Oil petrol pumps. MTNL has also launched a co-branded credit card with American Express, which is provided free of cost to the subscribers if they pay their telephone bills through the credit card.

MTNL is also planning to enter long distance telephony and cellular in a very big way. This service is likely to be launched in November 2000.

EQM: MTNL has its under-head infrastructure in place. However, there has been a shift towards optic fibre cables. Will this make MTNL’s existing infrastructure a liability? How does MTNL plan to cope with shifts in technology?

Mr. Sundresan: MTNL plans to utilise its copper cables for providing access facility to Internet companies. MTNL is also in discussion with various television companies for providing access network through which Internet connectivity can be provided.

MTNL is also gearing up to provide the latest telephony solutions. These include cellular, CDMA and WLL telephony, which will cut down communication costs and bring the service within reach of the common man.

EQM: MTNL has entered the over-crowded ISP business, what are the competencies that make MTNL believe they can succeed?

Mr. Sundresan: Being a leader in telecommunications, MTNL has certain inherent strengths. It would leverage on these strengths to occupy a similar position in the ISP business. The company has already taken steps to improve content on its default portal ‘Bharat on Line (BoI)’.

MTNL is in the process of signing MoUs with Satyam, Infosys, Rediff.com, Pentamedia Graphics and few television companies for providing educational and entertainment content on its portal.

Further, it plans to enter the payment and certification gateway space. For this initiative a separate subsidiary has been set up by MTNL in Mumbai. The company is called ‘Millennium Telecom’.

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