Dropping MTNL profits have prompted the government to take a fresh look at the issue of letting the state-run company take its services to areas beyond Delhi and Mumbai.
Communications and IT minister A Raja had asked MTNL for a concrete proposal on this matter at a meeting with the company brass recently. The minister expressed concern about the decline in the profit of the company.
On his part, MTNL chairman and managing director RSP Sinha listed why his company was lagging. He said the drop in profit was due to increased competition, low tariffs like the OneIndia plan and a the service areas being restricted to Delhi and Mumbai. The development is sure to once again start a turf war with sibling Bharat Sanchar Nigam Ltd. Currently BSNL provides services all over the country except the lucrative circles of Delhi and Mumbai.
In 2006, the company had sought clearance from the department of telecommunications (DoT) to start services in Delhi and Mumbai, arguing that if MTNL could be given a national-long distance licence, why should BSNL be barred from entering the two lucrative telecom circles. But Dayanidhi Mara, who was the communications and IT minister then, turned down the proposal, saying the two state-owned companies would not step into each other?s area.
MTNL is owned 56% by the government and BSNL is a wholly owned government company. Sources said if Raja allowed MTNL at any stage to venture beyond Delhi and Mumbai, he would have to allow BSNL to enter the two circles where it was not present.
MTNL has just 2.8 million mobile subscribers and feels, if it is allowed to enter into other service areas, it can make profits. Similarly, with about 31 million mobile subscribers, BSNL feels by entering Delhi and Mumbai, it can improve its subscriber base substantially.
BSNL is the largest GSM operator in terms of subscriber base after Airtel and Vodafone.