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August 15, 1997


Ring in the new

MTNL wants to ring out the old regime but needs autonomy

The Mahanagar Telephone Nigam Limited has applied to the Department of Telecommunications for modifying its 'articles of association' and grant it financial autonomy to invest in projects up to a given limit and independence to enter into joint ventures and float subsidiaries.

S Rajagopalan, chairman and managing director, MTNL, has said he had asked for the kind of financial autonomy which has been given to the Navaratnas or government organisations identified for concessions to enable rapid growth. MTNL is basically asking for freedom to invest up to Rs 2 billion in a given project.

At present, investments exceeding Rs 200 million and formation of subsidiaries have to be cleared by DoT.

MTNL is eager that its board of directors be given freedom to float subsidiaries and joint ventures since the company wants to enter the value-added services market. One of the options being considered is to enter into joint ventures with private parties for offering value-added services.

MTNL has applied to DoT for permission to start value-added services since it has a licence to operate only basic services in the cities of Delhi and Bombay.

The telecom company is likely to become an Internet service provider and has asked DoT for immediate permission to do so. Rajagopalan said MTNL would be able to provide Internet subscriptions at competitive rates, lower than Videsh Sanchar Nigam Limited rates.

MTNL may also provide other services such as personalised communications services, otherwise referred to as the poor man's cellular service; intelligent services and services such as reverse billing. A cellular service may also be launched by MTNL.

Some of these services could use MTNL's existing network with little additional equipment. This also means that MTNL can get off to a quick start once it decides to launch a service.

"Earlier, these services were thought of as being elitist. Maybe such notions are still relevant for DoT but MTNL services the creme la creme of subscribers in the premier cities of Delhi and Bombay. It is for tapping the private sector's marketing competence that we are looking at joint ventures," Rajagopalan said.

MTNL also wants the freedom to spin off subsidiaries which will offer value-added services.

An important issue under discussion at MTNL and DoT is tariff balancing for MTNL subscribers. Rajagopalan would like to replace the current system with cost-based pricing.

At present, long-distance rates subsidise local call rates and rentals. This skews revenue inflows - 20 per cent of subscribers contribute 80 per cent of revenues.

MTNL would like to charge realistic rentals and therefore bring down long-distance call rates. This would even out the distribution of revenue inflow.

- Compiled from the Indian media

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