A Weak Ring From Mtnl

The improvement in performance is attributed to overall growth in operations and increased customer base. The customer base has more than doubled in the Eighth Plan. In 1996-97, MTNL received registrations for an all-time record of 1,87,199 connections. It expects to reduce the waiting time and hopes to provide connections on demand by the end of the current year.

Besides, it is also replacing the obsolete analog systems to digital systems. Around 90 per cent of the lines are said to have been digitalised till date. The systems are expected to be totally digitalised by the end of the current year. However, other income has declined by 6.36 per cent to Rs 66 crore, contributing 4.7 per cent to profit before tax as against 5.65 per cent in 1995-96.

MTNL has also been able to bring down the interest burden by 9.9 per cent to Rs 148.84 crore. Depreciation has increased by 5.46 per cent to Rs 490.89 crore.

However, tax liability went up marginally by 2.3 per cent to Rs 530.47 crore, paid at an effective rate of 37.5 per cent, against 41.5 per cent in 1995-96.

The company is optimistic on the future operations. The new tariff structure will further boost the earnings. However, this would be partially nullified by the rise in licence fee due this year to DoT as well as increase in wages on account of the recommendations of the fifth pay commission. It has planned to provide 12.3 lakh new telephone lines in the current year, with a capital outlay above Rs 5,000 crore. All the future expansions are expected to be funded mainly by internal accruals and debt.

MTNL also plans to provide integrated services digital network (ISDN), which will enable the customer to send data at 64 Kbs. The MTNL stock has seen heavy buying interest by domestic as well as FII investors. The scrip has gained considerably after the announcement of special sops for the telecom industry in the Union budget. The results, however, failed to impress the stock price. The stock may move in the same price range.