MTNL, BSNL Prep for 3G Battle

In an effort to preempt the competitive threat from the privately held operators that have secured 3G spectrum, state-owned Indian carrier Mahanagar Telephone Nigam Ltd. (MTNL) is to offer its entire 2G subscriber base the chance to use the carrier's existing 3G services. (See India's 3G Auction Ends, Raises $14.6B.)

MTNL and its fellow state-owned carrier BSNL, were awarded their 3G spectrum early, and have been offering 3G services for nearly 18 months, giving them a significant head start on their privately held rivals. (See MTNL Offers 3G Mobile TV, MTNL Launches Prepaid 3G, and MTNL Launches 3G.)

So far, though, only about 400,000 of MTNL's 5.1 million-strong mobile customer base have signed up for 3G services. The carrier, though, wants to encourage its GSM (2G) customers to make the leap to W-CDMA (3G) and have access to the greater range of data services, and is waiving any associated fees.

"We [will] enable our entire subscriber base to move to 3G. This initiative will be launched soon," said MTNL's chairman and managing director, Kuldeep Singh, on the sidelines of an industry event in New Delhi, where MTNL will face 3G competition from Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Reliance Communications Ltd. , and Vodafone India . The same three giants will also battle it out with MTNL for 3G supremacy in New Delhi.

MTNL's offer to its 2G user base looks attractive in principle, but it doesn't mean 3G tariffs will be cut. "The tariffs are already at rock-bottom prices, and we are not considering this option," stated Singh. (See MTNL Launches Low-Cost Pre-Paid 3G .)

MTNL, which offers fixed and mobile services in New Delhi and Mumbai, can afford few concessions currently, as it recently announced losses of 15.74 billion Indian rupees (US$336 million) for the January-to-March quarter. (See MTNL Reports Q4 Loss.)

The cost of services might not be the only sticking point. Even if a customer decides to sign up for the new generation of services, an upgrade from 2G to 3G will depend on a number of factors, particularly whether their handset is 3G-ready. MTNL already has agreements with Micromax Informatics Ltd. and Nokia Corp. (NYSE: NOK) that allow it to offer 3G handsets at subsidized rates, and Singh said MTNL will be looking to strike similar deals to make a broader range of affordable 3G devices available to its customers.

BSNL, which offers its fixed and mobile services in the 20 circles (service areas) where MTNL doesn't operate, has a 3G subscriber base of more than 1 million, and is looking to capitalize further on its time-to-market advantage. (See India 3G: BSNL Hits 1M.)

"Definitely, we [will] be taking aggressive initiatives to increase our 3G subscriber base," stated the operator's chairman and managing director Kuldeep Goyal, though he didn't provide any details.

What's clear is that both MTNL and BSNL need to build as big a user base as possible before the 3G market becomes more competitive, as the duo need to figure out how to generate the cash flow that can help them pay for their 3G spectrum. MTNL must pay INR65 billion ($1.37 billion) for its capacity in New Delhi and Mumbai, while BSNL faces a bill of INR165 billion ($3.47 billion).

— Gagandeep Kaur, India Editor, Light Reading

Gagandeep Kaur 12/5/2012 | 4:34:13 PM
re: MTNL, BSNL Prep for 3G Battle

MTNL is all set to launch Laptop TV as well in the coming month...clearly to motivate its subscribers to move to 3G network before private players get to launch 3G services in India. The company expects to increase its 3G subscriber base from 1 lakh (in Mumbai) to 3 lakh (in Mumbai) by the end of the current financial year...



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