Mahanagar Telephone Nigam Ltd (MTNL) will float a global tender this month to select a joint venture partner for providing cellular services in Mumbai and Delhi. The company intends to start cellular services in the two cities before the end of calendar 1998, MTNL chairman and managing director S Rajagopalan told a press conference here yesterday.
The process is likely to create a lot of interest among global telecom majors, since Delhi and Mumbai are considered the most lucrative cellular markets in India. The total market demand for cellular services in the two cities is estimated at over Rs 2,600 crore annually by 2001. Opposition to MTNLs entry into cellular services by the Cellular Operators Association of India is unlikely to affect its plans, sources said.
MTNL intends to go ahead with plans to offer cellular, Internet and intelligent network services in calendar-1998 despite lower inflows into its coffers in the just-concluded GDR issue. MTNL received Rs 705 crore through flotation of 30 million shares (including a greenshoe option of 10 million shares). Initially, a 107-million shares issue was planned, including a divestment of 40 million government shares. The issue size was later scaled down to 70 million shares, with the divestment component left untouched.
Each of the cellular networks in Mumbai and Delhi is expected to cost $150 million (Rs 585 crore). We are in the last stages of finalising the cellular technology to be used on our networks. We will float a request for proposal (for partners) this month, install equipment by the second quarter of 1998 and start the service by the fourth quarter.
Rajagopalan clarified that MTNL did not intend to float separate joint ventures to offer Internet services and card phones. Internet services will be offered next year. Tenders are being invited and by March 1998, we shall finalise offering services, Rajagopalan said. MTNL plans to install 1,000 card phones each in Mumbai and Delhi.
Rajagopalan stressed that the telecom companys expansion plans were on track despite the reduced IPO. Of the Rs 2,000 crore (to be invested over the next year), 75 per cent will be raised from internal resources, 20 per cent through debt and five per cent through (a part of the) GDR inflows, he explained. When the floatation of 107 million MTNL shares was first envisaged, more than three-fourths of the Rs 2,000 crore fresh investment was to be financed through GDR inflows into the company.
Emphasising that MTNL shares had been allotted to quality investors, Rajagopalan said, Seventy-nine per cent of shares were allotted to tier-I rated investors, 13 per cent to tier-II, seven per cent to tier-III and one per cent to tier-IV (investors). He added that the greenshoe option of 10 million shares had been already allotted at Rs 235 a share. MTNL employees will soon be allotted 200 shares each as part of a stock option scheme. MTNL reiterated that no further dilution of equity was envisaged.
