MTNL	2
CMD: Narinder Sharma Address: 12th Floor, Jeevan Bharti Tower-1, 124, Connaught Circus, New Delhi - 110 001 Tel : 011-23719020/23359272 Fax:011-23314243 Website: www.mtnl.net.in  V&D estimates CyberMedia Research

Last fiscal, MTNL tried to arrest its eroding market share by focusing more on fast-growth sectors like cellular services and wireless-in-local-loop. But it was just not enough for this telecom behemoth that has services operations in the country’s two largest cities, Delhi and Mumbai. FY 2002–03 has proved to be one of the worst years for MTNL. The operator showed negative growth in both volumes and value terms. Its national share of basic service subscribers dropped to 10.97 percent from 11.79 percent in the previous year while its annual turnover came down by 5.8 percent. The decline in profit after tax was a serious 31 percent. In the cellular business, the incumbents and the fourth licensees did not allow MTNL to pick up a big share. MTNL’s WLL (M) offering Garuda paled in comparison to the WLL (M) launches of Tata Indicom and Reliance Infocomm. MTNL was also affected by the huge tariff reductions in STD/ISD charges that became effective during the last quarter of FY 2002–03. Also, there was a shift in the approach of provisioning DELs. MTNL emphasized more on providing wireless connections-both cellular and WLL-than the traditional fixed telephones. As a result, ARPU dropped almost 15 percent during the fiscal.

Looking forward, it is felt that MTNL will feel the pressure of competition getting even more intense during FY 2003-04.

Profits are likely to be even more depressed owing to greater expenditure on wireless network expansions and falling returns on investments due to the declining ARPU. The silver lining this year, however, could be broadband DSL, which MTNL has started offering. This has immense potential, considering the large base of telephone and Internet customers that can be converted.