Mtnl Set To Buy Software Company

State-owned Mahanagar Telephone Nigam Ltd (MTNL) is all set to acquire a Chennai-based software company. According to sources, this is one of the software firms shortlisted by the telecom company with a turnover of between Rs 10 crore and 20 crore.

It also learnt that the telecom major will finalise the deal in another month's time. The software company will be acquired by MTNL to develop its in-house software needs.

It is understood that MTNL would prefer the equity route for the acquisition.

The funds would be routed from the Rs 500 crore earmarked for overseas investments and acquisitions.

If acquired, the software firm would be directly under the control of the chairman and managing director and not be a part of Millennium Telecom, the fully-owned subsidiary of MTNL for Internet related activities, which is yet to be registered.

However, e-commerce activities and Net-related and value added services like ISDN and intelligent networks would be under Millennium Telecom.

This would be the first-ever acquisition by the telecommunications major which has ambitions of becoming an IT major, and of not being restricted to telecom.

Analysts also feel that MTNL is going in for the acquisition following the global trend of telecom companies buying out software units.

MTNL had, on November 19, 1999, amended the articles of association to allow it to diversify into other activities and provide services to various parts of the country and abroad.

The resolution was passed in the extraordinary general meeting of the company. This is to give the board powers to go ahead with programs without always getting back to the share holders for every issues.

MTNL has already announced that "it has big plans to enter e-commerce". MTNL will tie up with Rediff, Satyam and a slew of other portals to co-brand its portal www.bharatonline.com.

The company will initially forge alliances with Rediff-on-the-net and Satyam Infoway. The memoranda of understanding will be signed next week.

It is also expected to tie up with more portals to attract more traffic to Bharatonline.com.