3G low-tariff gambit will pay in 3 months: MTNL

Mahanagar Telephone Nigam Ltd (MTNL), the public sector telecom firm which is offering lowest rates to attract more 3G users, said the rise in subscriber numbers in the next three months would offset the revenue loss incurred due to low tariff.

The telco, with a 3G subscriber base of 2.5 lakh in Delhi and Mumbai put together, expects to double it to about 5 lakh in the next three months.

“At the moment more than revenue we are looking at mass. In the next 2-3 months the volume of subscribers on 3G will increase substantially,” Kuldip Singh, the newly appointed chairman and managing director of MTNL, said. The PSU telco invested Rs 650 crore for launching 3G services in Delhi and Mumbai.

To generate a huge subscriber base, MTNL has come out with the lowest 3G offering —Rs 10 SIM card. Its another scheme allows for a pulse rate of half-paisa-per-second for voice calls and a data download tariff of 10 KB for one paisa on Rs 149 SIM card that offers Rs 12 talk time. But observers are apprehensive of the viability of low tariffs in the long run.

Singh said, “In the short term low tariffs have adverse impact on revenue. But as usage goes up the revenue goes up, since these are service-driven offerings. We have kept the entry barrier low so that there is faster uptake. The tariffs are even lower than 2.5G.
The volume growth will help negate the initial hit due to low tariff. We expect revenue will offset the effect due to low tariff in three months.”

MTNL also plans to roll out a number of new technologies in FY2010-11. “We will launch fibre-to-the-home (FTTH) technology involving 1,20,000 km of fibre network in Mumbai and Delhi. We will also roll out next-generation-network (NGN) for our landline subscribers in the same fiscal,” he said.

While FTTH can carry high-speed broadband services integrating voice, data and video, NGN refers to a network that transports all information and services (voice, data and video) by encapsulating them into packets.

MTNL has lined up a capex of Rs 1,300 crore in FY10-11 which, in addition to new technologies, will be spent on rolling out additional 1 million GSM lines and 5 lakh broadband lines.

The firm has launched VDSL services for broadband users, especially companies with high-speed internet requirements, with a download speed of 20 mbps and upload speed of 6 mbps at Rs 4,999 per month.