MTNL plans Rs 800-cr capex in FY13

To upgrade network once the new telecom policy clears air on spectrum sharing

State-run Mahanagar Telephone Nigam Ltd (MTNL) plans to spend about Rs 800 crore in the next financial year to upgrade its network and add more capacity in the GSM segment.

It also plans to enter the new segment of wholesale bandwidth, once the new telecom policy clears the air on sharing of spectrum. The new telecom policy is expected to be ready by next month. The government has already issued a draft of the details.

“We will add one million lines at an investment of about Rs 100 crore in the coming fiscal,” a senior MTNL official told Business Standard

The company recently invited bids from both Indian and foreign companies for providing equipment to expand capacity in 2G and 3G segments. It will also increase the data speed on its network to 14 Mbps from the current 3.6 Mbps. It plans to lease out bandwidth to private companies, once the government comes out with the new policy. “We need to explore new streams of revenues and leasing out bandwidth is one,” the official added.

NEXT DIAL

* To add a million lines in GSM space, both 2G and 3G

* Explores new streams of revenue such as leasing out bandwidth

* Looks for franchisee agreement for CDMA services

* Its current employee base is about 45,000

* Has asked DoT for help in providing VRS to a third of staff

These are some of the measures it has planned in 2012-13 to improve financial performance. The loss-making company, which provides services only in the Delhi and Mumbai service areas, has been struggling to keep pace with intense competition in the sector. It posted losses of Rs 2,827 crore in 2010-11, with revenue of Rs 3,841 crore.

After a gap of almost two years, MTNL had got a fulltime chairman and managing director in A K Garg, in December 2011. It has also asked the department of telecommunications (DoT) to clear a voluntary retirement scheme (VRS), to be offered to 15,000-20,000 employees, a third of its workforce. The proposal has been cleared by the MTNL board. This would require the company to make a one-time payment of Rs 2,000-3,000 crore and MTNL has asked DoT for financial help. Its current employee base is about 45,000. In 1998-99, it had nearly 62,000 employees.

MTNL is also in the process of appointing a consultant for formulating a plan of action for its CDMA business. It wants to focus only on the GSM segment. The company has already decided not to make any fresh investment in the CDMA segment, as there is no growth, the official added. It has about 150,000 users on its CDMA platform, Garuda, in Delhi and Mumbai. However, its CDMA users are not able to avail the roaming facility, as it’s only a limited mobility service. “Due to the restrictions in the limited mobility service, we are not seeing any growth in the segment. Because of this, we have decided to not to make any fresh investment currently,” the official said.

The company may also go in for a franchisee arrangement for managing its CDMA business but a final decision will be taken only after some time.

Communications minister Kapil Sibal has taken keen interest in the functioning of MTNL and the other loss-making state telecom company, Bharat Sanchar Nigam Ltd. He is confident of turning around both and has directed DoT to review the performance of both each month.