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MTNL Puts Faith in Triple Play

Light Reading
News Analysis
Light Reading
1/31/2008

Indian state-run operator Mahanagar Telephone Nigam Ltd. (MTNL) reported a less than stellar third quarter Wednesday, posting a 56.4 percent drop in net income and an 8.4 drop in revenues.

MTNL, which offers fixed-line and mobile services in Mumbai and New Delhi, saw its net income fall to 976.4 million Indian Rupees (US$24.8 million) from INR2.24 billion ($56.9 million) a year earlier. The third-quarter profit was, though, a slight improvement compared with the previous quarter's net income of INR947.8 million ($24.1 million).

Year-on-year revenues were down 8.4 percent to INR13.27 billion ($337 million) from INR14.49 billion ($368 million).

Shares in the carrier sank by 6.62 percent to close Wednesday at INR123.40 on the Bombay Stock Exchange.

The carrier faces an uphill climb to hold on to its fixed-line subscriber base in the competitive Mumbai and New Delhi markets, where customers are shifting to mobile phones. MTNL lost 20,000 wireline customers in the month of December alone, reducing its base to 3.59 million. During the quarter, the operator signed up 182,760 new mobile customers to end the year with 2.95 million GSM customers.

Now MTNL, the first operator to launch commercial IPTV services in India, is betting that the introduction of triple-play services will help it combat the decline of its fixed-line business. (See MTNL's IPTV Sparks Regulatory Debate and India's Telcos Watch MTNL for IPTV.)

On January 1 it launched new bundled offers in Mumbai that combine a landline with broadband, 150 IPTV channels, and/or VOIP, a service it introduced last summer. (See MTNL Launches VOIP Service.)

Its Triband Combo subscription plans range from INR400 ($10.15) per month to INR750 ($19.04) per month.

MTNL, which ended 2007 with 512,000 broadband subscribers, has set a target of 50,000 IPTV customers by the end of this year. It currently has around 2,000 IPTV subscribers in New Delhi and 2,200 in Mumbai. The carrier, which recently upgraded its MPLS backbone with Huawei Technologies Co. Ltd. gear, has set itself a target of more than 2 million broadband customers in the near future. (See MTNL Uses Huawei for MPLS.)

The carrier has plans to invest INR15 billion ($381 million) this year to expand its mobile and broadband networks.

The operator is not without its mobile challenges either, despite its growth. MTNL has been at a disadvantage of late due to delays in a GSM equipment delivery from state-owned vendor ITI Ltd. , and has had to divert base station equipment from New Delhi to Mumbai to keep up with demand.

MTNL has been restrained in expanding geographically because its sister company, Bharat Sanchar Nigam Ltd. (BSNL) , provides network coverage in the rest of the country. Local media reports have suggested the government is preparing to award the carrier a national mobile license, although MTNL issued a statement noting that "the Company has not provided any such information."

— Nicole Willing, Reporter, Light Reading

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