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MTNL seeks partners for long distance foray

The state-run fixed-line phone company Mahanagar Telephone Nigam Limited is sewing up plans to enter the national long distance telephone business along with a subsidiary of the Indian Railways and a third partner, its chief said on Tuesday.

MTNL chairman and managing director Narinder Sharma said the company was in negotiations with partners for its foray into the long distance telephone business.

The government threw open the long distance business last August to unlimited private competition, ending decades of state monopoly over the business. It set an entry fee of Rs 5 billion for firms eyeing the business.

MTNL is among several companies planning to enter the business. Private groups such as Reliance and Bharti Enterprises have already applied for licences and also laid vast tracts of optic fibre cable.

Sharma said MTNL also planned to apply for a long distance licence, but did not indicate the timing.

"We won't be going into the business alone. RailTel will be our partner in the venture. We are also negotiating to finalise a third partner," Sharma said.

He did not give details of the firms MTNL was negotiating with or the proposed equity structure of the company being planned for the new foray.

MTNL, in which the government holds a 56 per cent stake, now provides fixed-line, cellular and Internet access services in the cities of Bombay and New Delhi and has over four million customers in the two cities.

READYMADE INFRASTRUCTURE

The tie-up with RailTel is expected to give it a significant lead in the business as the railways' subsidiary would provide it a readymade infrastructure required for the business.

The Indian Railways, which operates one of the largest rail networks in the world, has a nationwide "right of way" along 62,800 route km (39,250 miles) of railway track passing through over 7,000 stations.

The railway network already has nearly 20,000 route km (12,500 miles) of microwave radio system, 12,000 route km of trunk cables, 3,000 route km of optic fibre cables and 43,500 km of overhead wires.

Another 4,268 route km of cable is in an advanced stage of execution and the railways have sanctioned work on another 6,656 route km to be completed during this year.

The railways plan to transfer all these assets along with their right of way into a subsidiary, the RailTel Corporation of India Ltd, to set up a nationwide broadband and multimedia network.

Access to this infrastructure, considered only second to that of state-owned telecoms giant Bharat Sanchar Nigam Ltd, will give MTNL an early lead in the business, analysts said.

"The railways already have cables between Bombay and New Delhi, which accounts for nearly 17-18 per cent of India's total long distance call traffic. They will get to keep the entire call themselves," an analyst with a European brokerage said.

Currently, fixed-line phone firms have to route all long distance calls on BSNL's network and get to keep 60 per cent of revenues from these calls.

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