State-owned telecom service provider Mahanagar Telephone Nigam Ltd (MTNL) became the first company to launch 3G services in Mumbai and Delhi, the two most coveted circles, after priority allocation of spectrum. However, it has withdrawn its plan to acquire Sri Lanka’s Suntel, while attempts to enter Saudi Arabian and Kenyan markets were also not successful. Chairman and Managing Director RSP Sinha tells Rajesh S Kurup that he continues to look at global opportunities. Excerpts:
Other operators are fuming against the preferential treatment on spectrum allocation.
We didn’t fume when certain private operators were allocated GSM licences and spectrum ahead of the state-owned companies. Globally, incumbents are given licences and spectrum much before these are allocated to new entrants.
We have received 3G spectrum at least six months ahead of others, who will have to wait for the auction. It should be noted that apart from being a public sector unit, we would be paying the same price as the highest bidder. However, with mobile number portability (MNP) coming in, the first mover will have no major advantages, as quality of services would be the benchmark for the customer.
What is the status of the Suntel acquisition? Why did MTNL’s attempts to enter Saudi Arabia and Kenya fail?
We have decided not to go ahead with our plans to acquire Suntel, as there are certain legal issues (the company has court cases).
We had quoted around $4 million for a fixed-line services licence in Saudi Arabia, but were outbid by another company, which quoted $6 million. For the controlling stake in Telkom Kenya our bid was around $7 million; still we were outbid. MTNL is looking at other global opportunities, even as we continue with our operations in Nepal and Mauritius.
Is there a concern on spectrum allocated in Mauritius for GSM operations?
We had got the licence for GSM operations. But the spectrum allocated is 1,800 Mhz, while we are seeking 900 MHz frequency. 900 Mhz is a superior spectrum and this will enable us to compete with other players in the country.
Are you planning to demerge the towers into a separate company, like the private operators?
If it gives us value, we will look at demerging our towers into a separate firm. We have to discuss this with our board, and then we will take a call. We have around 1,450 towers, of which 600 are in Mumbai. We will be adding another 150 towers in Mumbai, of which 90 will be in Navi Mumbai and Kalyan.
What is your capex for the current financial year? Are you also looking at raising funds for expansion plans?
We have a capex of Rs 1,725 crore for the current fiscal. Most of this will go into GSM network expansion and 3G operations. We are a zero-debt company, and we would not be look at raising funds.
What are your plans on the emerging technologies like WiMax and Long Term Evolution (LTE)?
It took us almost two years of planning before we could actually rollout 3G services. For WiMax, we will enter into partnerships with companies having expertise in this sector, while we will also look at rolling out services like LTE, among others. On WiMax, roaming is still an issue and we are looking into this.
MTNL had earlier launched services in Delhi, but the responses were not encouraging.
We had launched 3G services in the New Delhi Municipal Council area (a small portion of Delhi) and hence the responses were not that encouraging. We have only 200 nodes, and as we extend coverage, our customer base will grow. We launched 3G services in Delhi this February and it would take another couple of months before we get sufficient additions.
What is the pricing for 3G services in the Mumbai circle? How do you expect the Mumbai circle to fare?
Earlier, when we launched broadband services for just Rs 499 in the two circles – Mumbai and Delhi – other operators were providing it for Rs 2,000 per month. They later reduced to match our prices, after we started adding 600-700 users per month. Similarly, we will give competition a run for its money in the 3G space. I can assure you that no other company will be able to match our prices.
At present, we have a capacity of 7.5 lakh subscribers, but would only be able to support 4 lakh due to spectrum scarcity (MTNL has been allocated 5Mhz 3G band spectrum). MTNL is investing around Rs 250 crore in Mumbai, which will start commercial operations from June 1. We expect to garner around one lakh 3G subscribers by March 2010.
