Financial Daily from THE HINDU group of publications
Sunday, Mar 24, 2002
Info-Tech - Telecommunications
MTNL wants to take cell to more circles
NEW DELHI, March 23
IN what has put the Department of Telecommunication (DoT) in a quandary, Mahanagar Telephone Nigam Ltd. (MTNL) has sought permission to start cellular operations in three other circles, eight months after the bidding process for fourth cellular licences was completed.
According to official sources, a request to this effect was made by Mr Narendra Sharma, Chairman and Managing Director, MTNL, at the quarterly review performance conducted by the Telecom Commission recently.
They pointed out that MTNL had expressed its interest in offering cellular services in the three circles of West Bengal, Orissa and Bihar, which had not received any bids from private operator in July 2001. This is, therefore, unlikely to meet with any opposition from them.
However, the DoT while being sympathetic to MTNL's demands, has told Mr Sharma that it is "a larger policy issue'' which needs to be deliberated upon.
The department is yet to take a decision on whether to call in for bids for the three circles again. Further, by allowing MTNL to offer services in these three States, it will be allowing it to compete with another state telecom company Bharat Sanchar Nigam Ltd. (BSNL), which holds the third cellular licence in all circles except Delhi and Mumbai.
This would, in effect, reverse its earlier decision not to allow the two PSUs to compete with each other in cellular services.
The sources noted that if another round of bidding is called for these three circles, they could be some interest from the private operators this time around. Especially since, as per the TRAI recommendations, the DoT has decided to relax the licence conditions to attract bidders.
The authority had recommended that no reserve price should be stipulated at the time of bidding. Further it had also said that BSNL's plans for cellular services in these areas should be made known to the bidders to help them prepare their business cases, reducing their uncertainties and giving them greater confidence to make the bid. It had also recommended a relaxation in the rollout conditions.
Meanwhile, the sources pointed out that MTNL has raised another demand with DoT. It has sought an extension of its basic licence in Mumbai to cover the entire Maharashtra circle.
Mr Sharma told DoT that the company is facing pressure on its bottom line due to increase in licence fee, reduction in long distance revenue and emerging competition. By allowing it to extend its Mumbai licence to the whole State, the company would be placed on par with its competitor Hughes Tele.com Ltd.
He noted that ``a correction of the non-playing field'' was needed, because it had only a city-licence against a state licence of basic services held by its competition.
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