MTNL not to infuse any fresh equity into Nepalese venture

MTNL has also proposed to sell its stake in the venture that seems commercially unviable

State-run telecom firm MTNL has decided not to infuse any fresh equity into its Nepal's joint venture United Telecom Ltd (UTL) as it was not commercially viable.

MTNL has also proposed to sell its stake in the venture, which is being examined by the Department of Telecommunications (DoT). But, another proposal of bringing a rights issue was floated by the shareholders of UTL to fund the venture but MTNL decided not to invest further, according to a note by DoT.

UTL is a joint-venture between MTNL with 26.68% stake, Telecommunications Consultants India Limited (TCIL) and Tata Communications with 26.66% stake and Nepalese firm Nepal Ventures Pvt Ltd (NVL) with 20% stake.

MTNL, few months back, had roped in SBI Capital Markets to evaluate feasibility of investments in UTL.

In the recent shareholders meeting of UTL, it was also decided that NVL will pump in money of about NR 45 crore and be entitled to appoint one additional director with other shareholders remaining with one director each. Once, NVL reaches 51% of the total paid up capital, all shareholders will be entitled to appoint one director each subject to 10% of paid up capital.

The shareholders also agreed to increase the authorised capital to NR 600 crore. Apart from NVL, rest of the shareholders will have an option to exit after 2 years after giving a notice of 3 months, according to the note.

UTL, which was incorporated in 2001, offers service in 44 out of about 75 districts. Nepal's mobile services market is dominated by Swedish telecom major TeliaSonera's arm NCell with 57% market share and state-run Nepal Doorsanchar Company Limited with 43% market share.

UTL has a market share of only 2% in voice telephony with about 5 lakh customer base. The company is into landline business which has seen decline due to advent of mobile telephony business.