MTNL Q4 profit down 56 %

CIOL Bureau
New Update

NEW DELHI: Mahanagar Telephone Nigam Ltd has reported its quarterly net profit fell 55.8 percent as it cut call charges to retain customers amid rising competition. The NYSE listed company provides fixed-line, cellular and Internet access services in two of India's biggest telecom markets, Mumbai and New Delhi.

Net income from services fell 1.8 percent to Rs 13.56 billion. "Both topline and profit are below expectations," said Srinivas Rao, analyst at Mumbai-based Edelweiss Capital.

India's hotly competitive telecom sector, billed as one of the fastest growing markets in the world, has seen an intense price war as firms slashed tariffs across the board in a bid to retain users and attract new ones. New Delhi-based MTNL almost halved cellular-to-cellular tariff rates as a consequence and also cut national long-distance call charges to match similar reductions by competitors.

It also made incoming cellular calls from another state-run firm Bharat Sanchar Nigam Ltd free for its cellular users to boost its user base, which has lagged behind nimble rivals in the private sector such as Bharti Tele-Ventures Ltd., which is 16 percent owned by Singapore Telecommunications.

"The trend of weak revenue and profit is likely to continue for one more year as the full impact of price cuts will be seen in the financial year 2003/04," Rao said. Ahead of the results, MTNL's shares closed up 0.6 percent at Rs 92 on the Bombay Stock Exchange, whose 30-issue benchmark index ended up 0.33 percent.

The stock is down some three percent since the start of 2003, in comparison with a 12.4 percent slide in the benchmark index.