Mtnl Closes In On Cell Calls At Rs 2 Cell Calls

Cellular telecom vendors participating in a tender for supplying equipment to Mahanagar Telephone Nigam Ltd (MTNL) have quoted between Rs 5,000 and Rs 10,000 per subscriber, among the lowest prices quoted for such equipment in the world.

This will help the telecom public sector unit hawk cellular services at Rs 2 a minute compared with the Rs 6-8 a minute charged by private cellular operators.

MTNL chairman S Rajagopalan said the prices are inclusive of import duties. The basic telecom services provider in Delhi and Mumbai wants to install a cellular network capable of supporting two million subscribers in five years _ the largest such order from an Indian buyer.

The prices quoted by the vendors are reflective of this capacity requirement of MTNL.

The quotes by the vendors are the lowest ever bid in an Indian deal. Private cellular service companies received bids from equipment vendors at $500-700 (Rs 17,500_Rs 24,500 at the then prevailing exchange rates) two years ago.

The cheapest deal to date has been between Srinivas Cellular in Tamil Nadu and Ericsson, which was concluded at between Rs 8,600 and Rs 9,460.

The quotes place the financial size of the cellular equipment tender at between Rs 1,000 crore and Rs 2,000 crore. Rajagopalan clarified that the quotes do not include the price of the handset. He added that MTNL would float a separate tender for the handsets.

Rajagopalan said the Rs 5,000 per subscriber quote was for a dual-band system, which was one of the options put out in the MTNL tender. The dual-band network operates on twin frequencies of 900 mega hertz (MHz) and 1800 MHz.

Besides the dual-band option, MTNL had asked for two stand-alone options of 900 MHz and 1800 MHz. The former is the most expensive since the network has to rely on more radio base stations for the same area of operations. The equipment cost for 1800 MHz is between the price of the 900 MHz and dual-band network.

Among the vendors which responded to the MTNL tender are Ericsson, Motorola, Nokia, Alcatel, Siemens, Tata-Lucent Technologies and Nortel. The companies submitted both techno-commercial and financial bids in response to MTNL's request for proposals floated in May. The state-owned telecom company adopted a two-stage evaluation process which entailed separate techno-commercial and financial evaluation. The techno-commercial bids opened on July 15 and the financial bids opened last fortnight. The latter contain information on the quoted per subscriber price and the payment options being offered to MTNL.

Initially, the vendors are to supply equipment to support 100,000 subscribers each in Delhi and Mumbai. MTNL had initially planned to start cellular service in the two cities by end-1998. It may now be able to do by the second half of 1999. The total market demand for cellular services in Mumbai and Delhi is estimated at over Rs 2,600 crore annually by 2001.

On February 17, Telecom Regulatory Authority of India had struck down the cellular plans of MTNL. However, the telecom PSU won an appeal in the Delhi high court against the order on July 16. Cellular operators have appealed against the court verdict and the next hearing is slated for December 17.