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MTNL restarts ISP price war - Views on News from Equitymaster
 
 
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  • Dec 6, 1999

    MTNL restarts ISP price war

    Mahanagar Telephone Nigam Limited (MTNL) has stated that it will be slashing its Internet access charges by 15%. It is also planning to offer unlimited web surfing in four time slabs on payment of designated amounts. The move is expected to trigger off another rate cut by other service providers.

    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, which currently earns approximately 10% of its revenues from Internet and infotech related services, is planning to hike the share of these services to 25% by FY2002. The move has been inspired by the tremendous growth opportunities in this area, even as its fixed line telephony services face increasing competition. In light of this goal, the telecom giant is aggressively pushing its Internet access business. The decision to reduce access charges and also offer new services must be viewed in the context.

    The Internet access business is increasingly becoming competitive with numerous players offering similar services. The business is likely to witness deteriorating margins as prices tumble and growth slows down. The key to success will be the ability of the ISPs to provide portals and e-commerce solutions to clients and visitors.

     

     

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