Rediff Logo Infotech Find/Feedback/Site Index
October 28, 1999


Search Rediff

Separate MTNL subsidiary under study

Email this story to a friend.

The government is examining whether the Mahanagar, Telephone Nigam Limited can float a separate company for its cellular operations within the telecom policy without attracting any legal barrier, MTNL Chairman and Managing Director S Rajagopalan has said.

CPP system stayed
MTNL subsidiary
Telecom meet called
Ruling out the possibility of any cross-subsidisation for its cellular business, Rajagopalan said the company has to be cautious about floating a subsidiary for the mobile phone operations since the licence has been given to the MTNL.

''With great difficulty I have got back this licence and I do not want somebody to jeopardise it by going to court, interpreting that the third operator has to be MTNL and not its subsidiary,'' he told reporters.

However, in case the domestic monopoly carrier floats a subsidiary for cellular services, the government would be asked to provide it the advantage given to the private operators like the equity participation by foreign companies.

''I must also get a level playing as talked about by others,'' the company chief said.

MTNL has already got a name registered for its 100 per cent owned Internet business company called 'Millennium Telecom'. The paid-up capital of this company is Rs 1 billion. Rajagopalan said the future emphasis of MTNL would be Internet and cellular businesses.

''I would like to be known as an IT company,'' he said adding that the mission statement of MTNL is to be ''among the Fortune 500 companies.''

Encouraged by a phenomenal response for its cellular phones, MTNL would soon go in for GSM technology as well and would have a capacity of 100,000 lines each for Bombay and Delhi. The capacity has to increase to 450,000 lines by 2002.

The company would aim to capture 40 per cent of mobile business in Delhi and Bombay, coming out with ''innovative tariff packaging''.

While the MTNL mobile phone would not be meant ''exactly for the poor man'' but for everyone ''who needs it - be it auto-rickshaw driver, taxi driver and other people on the move. It does not have to be elitist product which it had become unfortunately because of the excessive tariff'', he said.

Rajagopalan reiterated, though ''politely'' that in case private cellular operators like BPL, Bharti and Hutchison do not pay security deposits for Internet connection charges, the interconnection facility could be held up.

''I may have to reduce the service (inter-connection). How long can you continue to give this service without this payment,'' he asked.

''I have been politely asking them for the past few years and the operators were giving no thought to it and it became a serious audit issue. It became a nuisance for me. But still I have not issued any threat. There has not been a single letter of threat. I was only telling them to please resolve this issue,'' the MTNL chief said.

If MTNL withdraws the inter-connection facility, users of cellular phones of private operators would not be able to reach land phones nor would they be able to receive calls from land phones.

Sharing his business plans with the media, Rajagopalan said the Internet and cellular telephony would be the emphasis area as part of the company's strategy to emerge among the global telecom and IT companies.

''Of course there would be operational efficiency but that is not enough to be a leader. We need a strategy as well''.

Among the various value-added services, MTNL is also planning paging operations. Since the Internet would be one of the key growth areas for the company, Millennium Telecom would be headed by a ''young managing director'' with complete professional freedom.

There would be no common culture between MTNL and Millennium Telecom, Rajagopalan said. He ruled out any immediate private equity participation in Millennium Telecom.

As MTNL wants to capture 40 per cent of the Indian Internet market, e-commerce would be a focus area for Millennium Telecom. ''We will extend e-commerce form business to consumer in a big way by taking up the billing of public utilities.

Rajagopalan said MTNL would like to extend its area of operations much beyond Delhi and Bombay. The company has made a bid for basic telephone business in Uganda that is seeking to sell majority equity in its state-owned telecom company. It has also made a bid for the Dhaka telecom circle along with TCIL.

''I want to benchmark MTNL against British Telecom,'' Rajagopalan said. On an average, subscriber's telephone fails once in four months in Delhi and six months in Bombay. But it is once in two years for a subscriber of BT. ''I want to achieve the BT level while it is difficult to achieve the Japanese level. In Japan fault in telephone comes once in 12 years,'' he said.


Tell us what you think