MTNL hopes Net TV and VoIP will improve margins

The India based Mahanagar Telephone Nigam Ltd is trying desperately to stop its declining profit margins. It seems the managers now realise that VoIP and IPTV services could help in this regard and they have decided to launch IP based telephony and television for their customers in Delhi and Mumbai.


The State-owned company is launching VoIP-based telephony services next week which will offer ISD calls to the US at around Re 1 per minute. It is also re-launching its IPTV services in a major way on August 15 with nearly 100 channels.The company on Friday reported a 6% decline in its net profit for the first quarter of the 2007-08 financial year to Rs 110 crore from Rs 118 crore in the corresponding quarter the previous year.


Explaining the reason for the decline, Mr R.S.P. Sinha, Chairman and Managing Director, told Business Line, “MTNL is offering its services to Delhi and Mumbai, which is highly saturated, while other operators are growing rapidly in the entire country. Even then we have not been able to sustain our profit margins. Going forward, the numbers will improve as we are planning a huge ramp-up of our IPTV and broadband services.”


MTNL said that the decline in profit was on account of declining tariffs, less collection from interconnection, and stiff competition.The company’s total revenues also dipped from Rs 1,272 crore in the first quarter of 2006-07 to Rs 1,195 crore at the end of June 30, 2007. “However, if you look at the revenues from mobile services, our growth is better than that of some of the private operators,” said Mr Sinha. As compared to the corresponding quarter of the previous year, there is an increase in income in mobile services from Rs 179 crore to Rs 216 crore, which is an increase of 20.89%.


The staff expenses during this quarter has gone down from Rs 448.9 crore to Rs 422.5 crore. The operative expense during the quarter ended on June 30, 2007 has decreased from Rs 223.2 crore to Rs 202.5 crore. As earlier reported, MTNL has received a refund of Rs 1,461.68 crore from the income-tax authority mainly on account of licence fee to be treated as an operational expenses & 80IA. “While the new services along with our GSM offering should see us getting better margins by the end of the current financial year, the Government should think about allowing MTNL to move beyond Delhi and Mumbai,” said Mr Sinha.