State-owned Mahanagar Telephone Nigam Ltd (MTNL), reeling under cash crunch, has decided to go in for revenue-sharing arrangements with other companies to launch new services.
“The idea is to improve the revenue position. So, instead of spending cash, we will go in for partnerships, based on revenue-sharing arrangement. This will also help us in reducing our losses,” a senior MTNL official said.
For instance, MTNL has already floated expression of interest for outsourcing of its broadband wireless access (BWA) business. The deal would be based on a revenue sharing arrangement. The winner would have to manage the services and network. MTNL expects to launch BWA services in the second half of next year. The official said MTNL was exploring options to lease out its land assets and create a new stream of revenues.
| COUNTERING LOSS |
| * Move will help the company arrest losses and increase revenues and exploring options |
| * To convert liabilities into assets, for instance land to be leased out |
| * MTNL posted a loss of Rs 346.47 crore in 2010-11; took loan of Rs 7,000 crore to buy 3G and BWA spectrum last year |
| * Plans to launch BWA services with a partner, under revenue sharing arrangement |
| * Has asked DoT for financial aid of Rs 3000 crore to give VRS to its 15,000 employees |
| * Currently, has an employee base of 45,000. In 1998-99, had a base of 61,967 |
| * For FY11, MTNL had revenues of Rs 3,841.2 crore and loss at Rs 2826 crore |
Ahead of the auction for private players, MTNL was given a slot of 20 MHz BWA spectrum each in the Delhi and Mumbai circles for Rs 4,534 crore in 2010. The company had to match the highest winning bidding in the auction held for private firms. Other firms which will launch BWA services include Reliance Industries, Bharti Airtel, Vodafone and Qualcomm with its partners. MTNL is facing a cash crunch after paying the government for third generation (3G) and BWA spectrum. It took a short-term loan of Rs 7,000 crore last year for acquiring the 3G and BWA spectrum in Delhi and Mumbai.
It has repaid a part of this and the rest has been converted into long-term loan.
MTNL, which operates in Delhi and Mumbai, reported a net loss of Rs 2,826 crore in 2010-11, up 8.27 per cent from Rs 2,611 crore in 2009-10. Total income rose to Rs 3,841 crore from Rs 3,781 crore.
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The company has been posting losses since quite some time because of retirement benefits, high wage bill and dipping revenues because of stiff competition in the telecom industry. It has also asked the department of telecommunications to clear a voluntary retirement scheme that will be offered to 15,000 employees, of its workforce.
The proposal has already been cleared by the MTNL board.
The scheme will require MTNL to make a one-time payment of Rs 2,000-3,000 crore and the company has asked DoT to help it financially to implement the scheme.
MTNL has 45,000 employees. In 1998-99, it had an employee base of 61,967, which came down to 44,910 in 2009-10.