The MTNL board has already approved the creation of the new subsidiary and the proposal is lying with the Government. The chairman of the new subsidiary would be MTNL chairman and managing director S Rajagopalan, who is currently headhunting for a dynamic young professional to take charge as the managing director of the subsidiary.

"We are hopeful of getting the nod from the Government shortly. We have finalised the name of the subsidiary and have decided to base it in Mumbai. The subsidiary would function like a private company with a small board and we would hire some goodtalent which is easily available in a country like ours. The entire marketing approach to the high-end products is different from our current business of providing basic telephony and hence the need to have a totally different company with the right culture to tap the vast potential that exists," Rajagopalan told The Financial Express.

Rajagopalan, who has recently received Government nod to fix flexible tariffs in the wake of private sector players doing the same and in the process threatening to take away MTNL's high revenue subscribers, is of the view that the fight with competition should be on service and customer care and not on pricing.

"Price wars are going to hurt both sides. This leaves us with the question of beefing up our service standards as well imparting greater customer care. We are, on the one hand, shortlisting some consultants to advise us on how we can focus on these needs better, especially with regard to our high-end services like ISDN etc which have not realised theirpotential. An appetite for these products needs to be developed and these have to be taken to the potential subscriber rather than the other way around as in the case of basic telephony, where there are long waiting lists. Innovative marketing and flexible tariff structures are going to be necessary and hence the move to hive off these activities into a subsidiary," said Rajagopalan.

"Our vision is very clear. We want to be a Fortune 500 company by the year 2005 and take up our turnover from Rs 5,000 crore to Rs 10,000 crore in the next five years. This will come through growth in the basic services alone but the intention is to be a total telecom services provider. The growth in the basic services sector will plateau in the next five years. By this time, the growth will be in data transfer rather than voice. Currently, 65 per cent is voice and only 5 per cent is in the form of data, which will drastically change and we are gearing up to be major players in data transmission as well," said Rajagopalan.