The telecom MNCs operating in the country are likely to be out of the reckoning in the run-up to shortlisting a partner for the proposed Mahanagar Telephone Nigam Ltd (MTNL) cellular joint venture. This follows a decision by department of telecommunications and MTNL brass to this effect.
The decision will leave out in the cold telecom majors like AT&T; US regional Bell operating companies like US West, Nynex and Bell Atlantic; Australian Telstra; besides a host of South-East Asian and Hong Kong-based ones. The decision will boost the chances of companies like Deutsche Telecom, France Telecom, Singapore Telecom, among others, which do not have a presence in the Indian cellular services market.
MTNL top executives denied the move, but sources in the department of telecommunications (DoT) said an informal decision to this effect had been taken. The guidelines for shortlisting a joint venture partner prepared by MTNL and DoT prescribe that there should be conflict of interest while choosing a partner.
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This means that the foreign companies which have a stake in Delhi and Mumbai will obviously not be considered. The (conflict of interest) guideline will also mean that foreign telecom companies with a presence in the countrys cellular industry are out, a DoT official explained. The guidelines also specify that the partner should not be an equipment manufacturer.
This will rule out the participation of telecom equipment makers like Ericsson, Motorola, Nokia, Siemens, Qualcomm, among others. Some telecom equipment vendors have expressed an interest in the MTNL cellular JV.
MTNL intends to set up a cellular joint venture in Mumbai and Delhi. The cellular networks are expected to cost $150 million (Rs 585 crore). The telecom PSU had initially planned to start cellular service in the two cities by end-1998. The total market demand for cellular services in Mumbai and Delhi is estimated at over Rs 2,600 crore annually by 2001.
Earlier, on February 17, the telecom regulatory authority of India (TRAI) had struck down the cellular plans of MTNL. However, when the telecom PSU appealed to the Delhi High Court against the order, it was allowed to go ahead with the planning and network design plans at its own risk. A final decision on the matter will be resolved only after the court decides on the case.
TRAI had disallowed MTNLs cellular plans on the February 17 on the grounds that DoT had not sought its (the regulator) recommendations on the matter.
Under the regulators interpretation of the TRAI Act, 1997, it is mandatory for the department to seek its recommendations before allowing a new telecom services provider or service in the country.