V&D Top 10 Company review - MTNL

More things happened in 1998-99 for this

telecom giant than in its entire history. First it was the cellular initiative, which was

shot down by the TRAI. Then MTNL faced competition for the first time in its history, when

Hughes Ispat was given the go-ahead to provide basic services in Mumbai. Then it plunged

into the Internet provision business. Then came the tariff imbroglio with the

TRAI.

Amidst all this, MTNL did one thing right.

It started caring for its customers better. According to its claims, many of its exchanges

in New Delhi and Mumbai started offering telephone-on-demand. Thus, the PSU’s

fortunes started growing out of the linkages of the telecom regulatory environment to

market conditions of competition, customer loyalty, increasing value-added services, etc.

The company posted a turnover of Rs

5,443.89 crore in 1998-99, a growth of 14 percent over Rs 4,779.33 crore in 1997-98. Sales

revenue accounted for Rs 5,246.80 crore—an increase of

12.7 percent over Rs 4,654.59 crore the

previous year. Other income of the PSU increased 58 percent from Rs 124.70 crore to Rs

197.10 crore. It had a better profitability ratio, with the net profit being Rs 1,317.28

crore (24 percent of the turnover) last year, growing by 16.6 percent over Rs 1,130.13

crore (23 percent of the turnover) in the previous year.

Its sales revenue increased at a CAGR of 16

percent, with the profits recording a whopping CAGR of 28 percent. It is one of the very

solid scrips on the BSE, though only three percent of its stock is with the public. The

Government owns 56 percent, with the FIIs accounting for the remaining 16 percent.

Last year, MTNL also made clear its

intentions to take over the other two metros—Calcutta and Chennai, apart from its

cellular and Internet ambitions. These portrayed the PSU’s ambitions to expand into

other territories and diversify into other related communications service areas. Keeping

this objective, the PSU last year went on make its basic telephony customers happy. Small

steps in this direction in the form of value-added services like free call waiting and

calling line identification were introduced. The major milestone was, however, the

telephone-on-demand at many of the exchanges in Delhi and Mumbai. It is putting out a

tender for 55 lckm JFTC in the current year for the purpose.

However, MTNL suffers from a huge

staff—64,000 people for 38 lakh lines (1998 figures). The other hitch with the

company is that 62.3 percent of its revenues come from only 4.7 percent of its subscriber

base. With competition looming large, costs and internal process will have to be

streamlined by the PSU.

Though MTNL has taken small steps toward

market orientation, it still has to go a long way in terms of customer satisfaction. For

instance, the transfer of a telephone line from one exchange to another still takes more

than a month, even though the company’s latest telephone directory claims the time

taken to be just 20 days. Moreover, MTNL should actively consider making its website more

interactive and up-to-date, considering its entry into the Internet services arena.