Well spend R1,145 cr for 3G network expansion

Written by Nikita Upadhyay | Nikita Upadhyay | Kuldip Singh | Updated: Jun 6 2011, 07:05am hrs
State-run telecom player Mahanagar Telephone Nigam (MTNL) has chalked out a growth path for the coming years. Though it may seem a little ambitious at the moment, the company is determined to reach its goal of becoming a total solutions provider and provide world class telecom services at affordable prices. In an interaction with FEs Nikita Upadhyay, Kuldip Singh, chairman and managing director, MTNL talked about the company's growing thrust on enterprise and broadband business, introduction of new services, turning operating gross margin positive next year and its plans for the BWA spectrum.

The company, for the year, witnessed an increase in revenues after a long time. When do you see it becoming profitable

We are curtailing our losses quarter after quarter. Increase in revenue is primarily due to an increase in our broadband and enterprise business. We did lot of work during CWG and set up a huge network, which gave us lot of confidence. We are looking at enterprise business in a very big way.

This year, our operating loss was 1/3 of our loss last year. This loss, at R2826.9 crore, is mainly due to provision for pension. If we remove this provision, then we wouldn't have had the loss. We paid a spectrum fee of R11,000 crore. This year itself, we are looking at positive gross margin, targeting a margin of R900 crore after including the provision for pension.

How are you planning to monetise your backhaul and tower assets

We have a robust backhaul infrastructure and are ready to share that. We can provide bandwidth on lease to corporates and other operators as well.

We also have a good tower infrastructure and we would like to get into active or passive sharing. Last year, we had R9 crore coming from rent. This year, we are targeting a rental income of R25 crore each from Delhi and Mumbai.

Other private operators are moving from older to newer technologies rapidly. How are you keeping up with the competition

We had revenues under pressure due to voice tariffs coming down drastically. I remember there was a time when a Delhi-Mumbai call was about R20 per minute. Now, it is a local call. It would take some time to recover our investments in 3G, but we are trying to bring innovative services. We calculate our incremental costs and then base our tariffs. Technically, we are much ahead of our competitors in the market. However, there is always a room for improvement and we also need a thrust in marketing. We have come a long way. The situation is much better than it used to be, but not yet what it should be.

What progress has been on 3G tender and BWA franchisee

We have got expression of interest for our 3G tender. Tata Teleservices and Aircel have shown interest. We might award the spectrum to both, which depends on the price that we agree on next month. For our BWA spectrum, we are looking at partners with whom we can do wholesale. We are looking at franchisees who could absorb the incremental capex for such services and we can provide spectrum on a revenue sharing model. We have appointed PwC as consultants on the same and will decide if we will do Wimax or LTE on the BWA spectrum. We are awaiting their report and then will come out with tender to invite expression of interest.

How has 3G taken off for MTNL

We do not differentiate between 2G and 3G subscribers. We realised that data usage on our network which used to be about 50 GB per day has grown to 800 GB per day. We plan to bring new technologies like IP multimedia services and Fiber-to-the-Home (FTTH) network. We recently launched push mail services in association with Bharat Berry at R50 per month. We have planned a capex of R1,145 crore which will be used for expansion of 3G network, increasing capacity by bringing in one million new capacity and launching new services.