MTNL to expand GSM capacity

22 Feb 2005

Indian fixed line and mobile operator MTNL (Mahanagar Telephone Nigam Ltd), the sister company of state-owned Bharat Sanchar Nigam Ltd (BSNL), has revealed that it will invest up to INR20 billion (USD456 million) in expanding its GSM network in the the metro circles of Delhi and Mumbai by the end of the 2005/06 financial year. The operator has already undertaken one expansion scheme over the last three months, upgrading capacity in its two operating areas: in January alone it added 44,659 new customers in Delhi, giving it a 53% share of the new subscriber market there, compared to Bharti’s 15% and Hutchison’s 10%; it also added 50,102 new subscribers in Mumbai. MTNL plans to launch a tender for 800,000 new GSM lines shortly – 400,000 in Delhi and 400,000 in Mumbai – which will be rolled out in addition to the four million 3G lines it hopes will be operational by the end of the 2006/07 financial year.

MTNL, which is 56.25%-owned by the Indian government and 43.75% by private investors, has provided fixed and GSM wireless services in Delhi and Mumbai since February 2001 under the brand name Dolphin. It introduced its pre-paid service, Trump, in January 2002. The company came under fire from the Department of Telecommunications (DoT) in January 2004 for its poor performance during 2003. The DoT asked the company to prepare a report on the readiness of its mobile network expansion programme, following news that it had managed to sign up just 85,000 customers the previous year. It also asked MTNL to collate figures on the efficiency of its revenue collection and the quality of its services. The government has since decided that the best way to improve MTNL’s performance is to bring it under the wing of the larger BSNL, and it is expected to announce a merger plan for the pair soon. Analysts hope that the state will then look to reduce its stake in the combined company to encourage further competition. At the end of September 2004 there were around 33 million mobile subscribers in India, a penetration rate of just 3.1%.

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