Mahanagar Telephone Nigam Ltd is likely to float a tender for 1 million GSM connections each in Delhi and Mumbai by the end of September.

"We aim to have 1.5 million GSM (Global System for Mobile) lines by the end of 2005. To achieve this target, we have to float the tender by the end of September," a source in the public sector telecom major told Business Standard.

If the cost per GSM line is taken into account, the tender is likely to be valued anywhere between Rs 800-900 crore (Rs 8-9 billion). The company is also aiming to add another 1 million GSM lines for each of the two cities by 2009. This will take the total GSM capacity of MTNL to 5 million by the end of 2009, sources said.

The company also plans to add 2.4 million CDMA (Code Division Multiple Access) lines, which will take its CDMA capacity to 3 million by the end of 2007.

At present, MTNL has 225,000 capacity in the GSM space each for Delhi and Mumbai. It has a GSM subscriber base of 429,000, with 224,000 subscribers in Mumbai and 205,000 subscribers in Delhi.

The company is unable to add new subscribers due to shortage of capacity. In Mumbai, it added only 102 GSM customers in July. In Delhi, on the other hand MTNL is adding subscribers only in the postpaid segment.

This has led to black marketing of MTNL's 'Trump' prepaid cards. MTNL had recently awarded a contract to Motorola for procurement of 400,000 lines of GSM technology equipment each for Delhi and Mumbai.

This equipment is likely to be installed by the end of this financial year. Himachal Futuristic Corporation Ltd had been awarded another contract to install 400,000 lines of CDMA 2000 1X technology equipment each for Delhi and Mumbai.

MTNL is in the final stage of placing purchase orders for 270,000 ADSL equipment (Asymmetrical Digital Subscriber Lines) for broadband services.