Mahanagar Telephone Nigam Ltd (MTNL), the state-owned telecom service provider operating in Mumbai and Delhi, may enter into a branding-based deal
MUMBAI; Mahanagar Telephone Nigam Ltd (MTNL), the state-owned telecom service provider operating in Mumbai and Delhi, may enter into a branding-based deal, along the lines of the recent Tata-Virgin venture, according to an HSBC Global Research report.
The company wants to boost the effective utilisation of its CDMA (code division multiple access) assets through the branding deal, the report pointed out.
However, the branding deal may not help MTNL, as CDMA faces an uncertain outlook in India, the HSBC report stated. “We are skeptical of any foreign player allying with state-owned telecom companies, as we believe a foreign/private player will find it difficult to adjust to the PSU style of working,” it added.
MTNL executive director J Gopal declined to comment on whether the telecom company is going for a branding exercise, akin to the Tata-Virgin deal.
Although the merger of the two state-owned telecom companies, MTNL and Bharat Sanchar Nigam Ltd (BSNL), has been on the cards for long, it is unlikely till the next general elections (scheduled around April-May 2009).
A senior official of BSNL recently told this newspaper that the issue of merger is still alive, but may take some time.
Analysts feel that higher MTNL remuneration has been a hurdle for the BSNL-MTNL merger. The HSBC report said the recent “wage revisions would allow the government to settle the difference, and clear the path for the BSNL-MTNL merger”.
The merged entity, once that happens, will offer its telecom services all across the country.
The Tata-Virgin deal had recently come under the government scrutiny, as competition viewed it as a MVNO (mobile virtual network operation), which is not permitted in India.
Subsequently, the government cleared the Tata-Virgin deal, saying that it’s not an MVNO, but a marketing and branding venture. MVNO is a mobile phone operator that does not own any spectrum or any infrastructure network.
The Department of Telecommunications (DoT) has now referred the issue of permitting MVNOs to the telecom regulator, TRAI. A consultation paper on the subject is expected from TRAI soon.
A few months ago, MTNL had applied to the government for offering pan-India services. But the DoT is unlikely to clear that proposal, a source said.
MTNL’s fixed line subscriber base declined 5% over the past 12 months and the company has not been able to arrest this churn. While growth in MTNL’s mobile business may continue, revenues from fixed line account for 75% of its overall core revenues.
Besides fixed line, MTNL offers global system for mobile communications (GSM) service under the Dolphin brand and limited CDMA service under the Garuda brand.
In a report, analyst Devyani Javeri of Edelweiss Securities said that core business growth opportunities remain limited for MTNL. Slow pace of mobility subscriber accretions coupled with stagnant wireline subscriber base, makes MTNL a relatively less attractive play in the Indian telecom space.
r_mithun@dnaindia.net
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