Vendors Support Mtnl Bid For Cellular Services

International telecom vendors have started lobbying for Mahanagar Telephone Nigam Ltd's (MNTL) entry into cellular services in Mumbai and Delhi. The manufacturers are lured by the estimated $600 million (Rs 2,580 crore) equipment order that the state-owned telecom PSU will place if its cellular foray is cleared.

Seven international companies _ Ericsson, Motorola, Nokia, Alcatel, Siemens, Tata-Lucent Technologies and Nortel _ have quoted among the lowest prices for the two-million subscriber capacity system MTNL wants to buy. They had reported to have bid in the band of $200-225 (free on board prices) per subscriber in the MTNL tender.

The catch, however, is that the tender will not actually fructify into a purchase order until a court case filed by private cellular operators is finally done with. MTNL has been barred from purchasing the equipment until the Delhi High Court passes a final order on the telecom PSU versus cellular operators case.

The MTNL tender enivisages capacity of its proposed cellular system rising to two million by the fifth year and is structured on a 40 milli-Erlang traffic projection as against conventional 20-25 milli-Erlang systems. Currently, cellular companies in the country are clocking only 12-15 milli-Erlang traffic.

This high traffic rating along with the significant capacity of MTNL's proposed system makes the order really attractive for the vendors. The higher traffic rating means that the network will have to have more radio base stations and a high capacity to handle subscribers, which translates into an order of significant value.

Sources said the vendors _ some of which are desperate to land orders in the Indian market _ were keenly watching the Delhi High Court case unfold and are likely to push for a speedy settlement. The cellular operators, on the other hand, want to delay MTNL's entry into cellular services, if not completely bar it from coming in.

They claim that by allowing MTNL to offer cellular services, the government has violated key terms of their licences which, according to them, do not allow for a third operator.

They also allege that the telecom PSU will subsidise its cellular operations from the revenues it earns from its basic telecom business.

The Telecom Regulatory Authority of India, on February 17, ruled against MTNL's cellular foray since the government had not taken its recommendations while deciding to do so. This, the regulator felt, was against the TRAI Act, 1997. However, this order was turned down by a single division bench of the Delhi High Court on July 17, which has prompted the cellular operators to file a writ petition against MTNL.

The operators' financial projections have got watered down after the announcement of MTNL's decision to enter cellular services.

The PSU is likely to corner a 30 per cent market share in its third year of operations (2002-03), when the total Mumbai and Delhi cellular market is projected to be in excess of Rs 2,500 crore.