J Gopal, executive director, MTNL, told DNA, “Our profitability depends very much on the 3G spectrum auction price."
Mahanagar Telephone Nigam Ltd (MTNL), the state-owned telecom utility, says profitability on its third generation (3G) mobile services will depend on the 3G auction price. The company is readying to launch 3G services in Mumbai in May after the February roll-out in Delhi.
The auction of the 3G spectrum has been deferred till after elections.
J Gopal, executive director, MTNL, told DNA, “Our profitability depends very much on the 3G spectrum auction price. If the reserve price for 3G is close to the auction price, we will surely turn profitable in two years. If it is twice or thrice, it will take very long to turn profitable on 3G.” 3G is an advanced mobile telecommunications technology that enables faster transfer of audio and video data.
Gopal did not elaborate on the investments being made to launch 3G services in Mumbai. In February, MTNL launched Jadoo, its 3G mobile service, in Delhi at an investment of Rs 400 crore. RSP Sinha, the chairman and managing director of MTNL, had said then that the company was looking for tie-ups with manufacturers of 3G handsets.
In January, the Department of Telecommunications (DoT) had proposed a reserve price of Rs 3,540 crore for GSM operators and Rs 885 crore for CDMA operators. The finance ministry wants to mop up about Rs 40,000 crore through 3G spectrum auction. For the Mumbai launch, MTNL has deployed 30 advanced base transreceiver stations (BTS) and plans to add more than 100 BTS in the coming months.
For its 3G services, MTNL has sourced network technologies from Alcatel Lucent.
Even though mobile penetration in both Delhi and Mumbai, the two metros that MTNL covers, is nearing 100%, the firm is looking at tapping new segments of users to drive revenues. “We earn an average revenue per user (ARPU) of Rs 200 on our mobile services.
Though the markets in Delhi and Mumbai are reaching saturation, we still have avenues to grow. We are targeting school-going children, students and professionals who come to these cities temporarily with greater value added services (VAS) such as video ringtones, visual talking experiences, visual chats, etc,” said Gopal.
Bharat Sanchar Nigam Ltd (BSNL), the other telecom PSU, has launched 3G services in 11 cities already. BSNL and MTNL were given 3G spectrum in 2008, ahead of the auction for private players.
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