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August 28, 2012

DoT Studying Business Proposals to Enhance MTNL's Revenue
By Shankar Pandiath
TMCnet Contributor

The government of India’s Department of Telecommunications (DoT) is looking into and studying several business proposals to boost the cash strapped Mahanagar Telephone Nigam Limited (NSE:MTNL).

Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) are the two state-controlled telcos in India, of which MTNL also serves Delhi and Mumbai.

According to Kapil Sibal, the Minister for Communications and IT for the Government of India, the DoT is looking at various options – developing and leasing out land most prominently. It is also looking at monetizing infrastructure through the creation of automatic teller machines (ATM) in MTNL’s premises, and further leasing out spare space and sharing of operator’s towers to boost and enhance the company’s revenue.

As per DOT’s estimates, these activities have the potential of generating revenue of up to $20 million for MTNL. Sibal had also stated that the state-owned telcos are working on a voluntary retirement scheme (VRS) for its staff in an effort to stem its increasing losses.

In a bid to generate revenue and set off losses, the state’s MTNL and BSNL have also prepared Voluntary Retirement Schemes (VRS) for their 121,000 employees, which would cost the government about $.3.5 billion. The two telcos are evaluating other measures to cut costs as well.

BSNL (News - Alert) plans to reduce its workforce by about 100,000 through a Voluntary Retirement Scheme (VRS).

Milind Deora, Minister of State in the Ministry of Communication and IT, said this ex-gratia expenditure is estimated to be about $.2.4 billion. Meanwhile, MTNL has prepared a VRS aimed at reducing its workforce by 21,000, which would cost the government about $1.1 billion.

Deora further added that this would reduce the pressure on MTNL’s salary pay out to about $200 million per year.

Deora also said that BSNL has proposed to develop 10 parcels of land for further revenue generation as a pilot project. BSNL has also put in a request to the Department of Telecommunications (DoT) for surrendering its Broadband Wireless Access (BWA) Spectrum (News - Alert) in certain Licensed Service Areas (Andhra Pradesh, Karnataka, Tamil Nadu, Maharashtra, Kolkata and Gujarat).

This would enable them to receive the $1.1 billion which was paid for the one time upfront BWA Spectrum charges.

MTNL has apparently also put in a request to the Department of Telecommunications (DoT) for surrendering its BWA Spectrum in the Mumbai and Delhi Licensed Service Areas and to refund them the money paid for the one time in upfront BWA Spectrum charges.

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Edited by Braden Becker


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