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Interview with N.K. Yadav, Chairman and Managing Director, MTNL

December 01, 2015
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Mahanagar Telephone Nigam Limited (MTNL) is targeting to become operationally profitable by 2017-18. In an interview with tele.net, N.K. Yadav, chairman and managing director, MTNL, and member, services, Ministry of Communications and IT, DoT, talks about the company’s recent initiatives for improving network quality, its key strategies and the issues facing the telecom industry. Excerpts…

How has MTNL’s performance been in the past few years?

Till 2010, MTNL was making profits and had even managed to sustain a corpus of Rs 50 billion. However, we have since had to pay Rs 110 billion for acquiring 3G and broadband wireless access spectrum. This expenditure was met through borrowing from banks. As a result, as of March 2015, our loan from banks stood at Rs 160 billion. We have to pay Rs 15 billion as interest payment on the loan this year. Further, the annual salary bill of the company is around Rs 25 billion, while the operational costs stand at Rs 8 billion-Rs 9 billion. On the other hand, the revenues of the company are Rs 34 billion-Rs 35 billion.

Therefore, if the interest payment of Rs 15 billion is removed, MTNL can become operationally positive within a year. The government has taken certain steps to this end, such as refunding money for the broadband wireless access spectrum. Moreover, MTNL is trying to reduce its employee costs. At present, MTNL has a staff of about 33,000, which is much more than is necessary. The average age of the employees is 53-54 years and hence, most of them are unable to undertake labour-intensive tasks. These are legacy issues and we are working towards resolving them amicably by taking the labour unions into confidence.

What steps are being taken by MTNL to improve network quality?

We are improving our existing copper network. In order to reduce the copper loop length, we are putting in additional nodes. Around 100 nodes have already been put in across Delhi/Mumbai and another 100 will be put in by March 2016. At new locations, we are putting fibre backhaul. Further, we are planning to share our duct infrastructure with other operators. In Mumbai, we are implementing a surveillance project along with Larsen & Toubro (L&T), wherein the fibre is being laid by us while the cameras are being set up by L&T. In addition to this, we have developed an online internet protocol (IP) tester to monitor the performance of our network. The mechanism is both technology- and vendor-neutral. It is available to all officers and enables them to monitor network issues online.

What are your views on the recent steps taken by the Telecom Regulatory Authority of India (TRAI) to improve the call drop situation?

The call drop issue is not affecting MTNL in Delhi/Mumbai much since call drops occur mostly as a result of spectrum refarming and MTNL is not undertaking refarming at present. Moreover, we are not rolling out 4G long term evolution services at present, and are therefore not facing any spectrum issues.

What are your 4G roll-out plans?

MTNL’s 4G services will be launched in due course of time. We will launch these services in the 800 MHz/900 MHz bands. MTNL has 6.2 MHz spectrum in the 900 MHz band, which is the maximum quantity available to any operator. Further, we will opt for spectrum trading and sharing as there is a dearth of capital for undertaking investment in acquiring new spectrum.

The government has recently approved the spectrum trading and sharing guidelines. What has been the response of private players to this? Does MTNL intend to enter into sharing agreements with other players?

Spectrum is a very important national resource and hence, it should be utilised optimally and efficiently. Private players had been waiting for a long time for the spectrum sharing and trading guidelines to be announced. While at present MTNL and Bharat Sanchar Nigam Limited (BSNL) are not entering into such agreements, we will definitely undertake them in the future. Spectrum trading and sharing are also likely to result in consolidation of the market, as less profitable players will use these means to slowly exit from the market.

What constraints will MTNL face while undertaking spectrum sharing and trading?

The only constraint is that, unlike private operators, our spectrum is not liberalised. This is due to the fact that we were allotted spectrum a long time ago, before it was liberalised. On the other hand, private operators have been given liberalised spectrum, due to which they have a universal licence, while we have separate licences for basic and mobile services. I think these issues will be resolved in 2017, when the spectrum is due for renewal.

What progress has been made on the proposed merger between BSNL and MTNL?

The decision regarding the merger of MTNL and BSNL would be made by the government. Meanwhile, the two organisations have  started synergising some of their operations. For instance, we are working towards offering a uniform tariff structure to our enterprise customers. We are also trying to utilise BSNL’s infrastructure that is present around our operational areas. For example, we intend to use BSNL’s base transceiver stations in the National Capital Region to provide better network coverage to our customers in Delhi.

What role can MTNL play in the government’s Digital India initiative?

At present, Digital India is geared towards improving broadband connectivity in rural areas, which fall under the purview of BSNL. Apart from BSNL, Power Grid Corporation of India Limited and RailTel are supervising this initiative in rural areas. As far as Delhi and Mumbai are concerned, the network coverage is fairly adequate.

What are your views on the perceived health hazards associated with mobile towers?

The radiation from mobile towers falls under the non-ionised segment of the electromagnetic spectrum and frequencies are much less than visible range. Radiation is not harmful up to the visible range. Moreover, the radiation levels just below the towers are much less than in locations in front of the towers. Hence, people under these towers should not worry about the radiation.

More problematic is the radiation from mobile handsets because of its distance from the body. Hence, handsets should be kept at a distance while listening or speaking on them through audio jack. This is because the effect of radiation is inversely proportional to the square of their distance from the body. Hence, for handsets, a 50 cm distance will make the radiation almost negligible, while for towers, a distance of 2-3 metres will render them harmless. The mobile system bands are very safe.

Further, while the international limit for radiation is 4.5 W per square metre, we have adopted one-tenth of this in India, that is, 0.45 W per square metre.

How has the broadband profile of MTNL users changed over the past two to three years?

Earlier, our wireline segment was focused on voice; now we are focusing more on data. Five years ago, less than 10 per cent of our wireline customers had broadband. Now, more than 35 per cent of our wireline customers are broadband subscribers and in the next two years, this number is expected to exceed 70 per cent. Data consumption on our network is doubling every two years.

What initiatives is MTNL planning to take on the Wi-Fi front?

Since our 3G network is slightly overloaded, we want to use Wi-Fi to offload our data. In Delhi, we have undertaken a project to deploy fibre to the homes of members of Parliament and are also setting up Wi-Fi hotspots at these locations. We also want to install hotspots at other locations on a revenue sharing basis. Under this, MTNL will only provide the backhaul infrastructure while the vendor will deploy the equipment.

How has the performance of MTNL’s international operations been?

The telecom business in Mauritius is worth around Rs 1 billion and our market share is close to 20 per cent. We are also launching our 4G services in the country. In addition, we have around 26 per cent share in a telecom company in Nepal.

How does MTNL’s current average revenue per user (ARPU) compare with that of other operators? Which segments are likely to contribute more in the future?

At present, our prepaid ARPU is comparable to that of other operators, while that of post-paid is slightly better. As far as the wireline segment is concerned, voice ARPU is around Rs 200 while data ARPU is around Rs 500. In the next two years, our aim is to convert all our wireline connections into broadband. The enterprise and broadband segments are expected to grow by 10 per cent in current year. These two segments account for close to 50 per cent of our current revenues.

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