Oct 26, 1999|
MTNL combine in Bangla telecom foray
According to newspaper reports, The Telecommunications Consultants India (30% stake)-MTNL (30%)-World Tel (20%) combine has emerged as a front runner to bag a basic telecom license in Bangladesh. The combine has been short-listed for the US$ 280 m project.
Mahanagar Telephone Nigam Limited (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.
With competition in the domestic markets, particularly in Delhi and Bombay, intensifying, MTNL appears to be looking at international markets to push its topline growth in the future. The tie up with TCIL and World Tel is to be viewed in this context.
As part of a similar strategy, MTNL and TCIL have jointly bid for a 51% stake in the state-owned telecom network in Uganda. The combine has cleared the pre qualification stage.
With TCIL's expertise in implementing turnkey projects, World Tel's global experience and MTNL's experience in operating a large fixed line network, the combine is a force to reckon with. However, the alliance is project specific only.
MTNL's strategy to leverage on its experience to participate in international projects is commendable. The move will help the company diversify some risk, as it will have a presence in several markets as against just one market.
However, with competition in its domestic turf intensifying the company may be thinning out its resources. This could lead to a faster loss of market share in the domestic markets of Delhi and Mumbai.
The MTNL stock has been rated as a 'BUY' by analysts on account of it being one of the least expensive fixed line operators in the world. Moreover, the company already has a large customer base and a good infrastructure in place. It is also expected to earn substantially by using its existing infrastructure to provide value-added services.
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