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November 18, 1997


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Private cellular operators have petitioned
for a stay on MTNL's mobile venture.

Mahanagar Telephone Nigam Limited's initiative to step into the mobile telephone business is being challenged by private companies in the industry.

The state-owned MTNL had a monopoly over the telephone business in Bombay and Delhi till recently. When mobile telephony was introduced a few years ago, private companies were invited to offer their services. MTNL
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was not allowed to jump into the fray but retained its monopoly over the fixed landline phone business.

But further liberalisation of the telecommunications policy has lead to several private companies taking up basic telephony work, encroaching on MTNL's turf. Not to be left behind, MTNL countered by embarking on a massive corporate re-invention programme, mulling over projects related to Internet and mobile services.

Many private operators are threatened by MTNL's expertise and infrastructure, which it gained as a government monopoly over decades.

Now that it is clear that the telecom giant is keen on the mobile phone business in the metropolitan areas, private cellular operators have filed a preliminary submission before the Telecom Regulatory Authority of India.

The submission asks the TRAI to impose a stay on MTNL's mobile phone plans.

Cellular Operators Association of India Executive Vice-Chairman T V Ramachandran has promised that a detailed petition will follow the preliminary submission.

The preliminary submission points to the TRAI Act that prescribes the function of the regulatory authority. The legislation says the TRAI is supposed to recommend the need of a new service provider and the licence terms and conditions.

Ramachandran claims that MNTL's plan to offer cellular services was announced without consulting the TRAI, clearly undermining the role, scope and authority of the regulatory body.

The cellular operators also draw attention to the metro cellular licence agreements, which empower only 'the director-general, telecommunications, or any officer empowered by him' as an authority to enter as a third operator.

This right does not automatically extend to MTNL, which is a separate corporation. Besides, the government is also slated to divest its holding, the submission argues.

MTNL has only 60 per cent government ownership and will need to float a subsidiary for the cellular project with equity participation of a foreign company as per licence conditions, it is pointed out.

'Under these conditions, MTNL's joint venture would, by no stretch of imagination, be considered to qualify as public authority for provision of cellular service as a third provider,' the preliminary submission wagers.

The Cellular Operators Association of India has also submitted that MNTL's entry will put the existing cellular operators into a major financial crisis as all of the industry draws on the same resources.

The argument can be extrapolated if profit-making MTNL's financial clout is considered. If it enters the mobile business as a third operator, the private operators are convinced there would be further drying up of funds available for investment in existing cellular projects.

- Compiled from the Indian media

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