With the Delhi High Court giving approval to the implementation of the code division multiple access (CDMA) contract for Mumbai, Mahanagar Telephone Nigam Limited (MTNL) is all set to storm into mobile telephony services market by March 2000. The initial capacity is slated to be 50,000 lines, going up to 150,000 within three years.
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.
Notwithstanding the disapproval of the Telecom Regulatory Authority of India (Trai), MTNL seems to be vigorously pursuing its plans to become a major mobile telephony services provider in the Delhi and Bombay markets. The company has already launched this service in the Delhi region.
MTNL has faced a lot of opposition from its competitors and the regulator on the charges of cost structure and cross subsidisation of services. Differences have also cropped up on account of the technology being used by MTNL. Whether the company will be able to roll out its services on time will depend on the handling of these issues.
MTNL has been facing a slow down in revenue growth. This is mainly due to increasing competition and a slower growth in issue of new connections. The problem has been compounded by the Trai's implementation of the new tariff regime under which rates and rentals were rationalised. This adversely affected revenue growth of all telecom companies including MTNL.
In order to step up growth the company is aggressively pursuing its Internet, information technology and mobile telephony ventures. These are all high potential areas that, if successful, could dramatically alter the fortunes of the company.
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