Search the Internet          Tips  Sites: Finance, Investment

Mobile firms link up to MTNL's discomfort

Cellular firms in Bombay and New Delhi are linking up to bypass state-run fixed-line telephony provider MTNL and not pay it any fees, officials said on Wednesday.

"We're interconnecting ourselves so that we don't have to pay MTNL each time our customer calls a number offered by the other service provider," S Bannerjee, chief executive officer of Sterling Cellular, a New Delhi-based cellular firm, said.

But the companies say they still have not decided whether to pass on any of the cost benefits to customers.

Sterling Cellular, owned by India's Essar group and Hong Kong's Hutchison Whampoa, is planning to sign a deal to tie up with Bharti Cellular, a company launched by unlisted Indian telecoms group Bharti Enterprises.

The two firms are the only private cellular operators in New Delhi. British Telecom holds 44 per cent of Bharti Cellular.

Bombay's two private cellular operators -- BPL Mobile Communications Ltd, a firm started by consumer electronics group BPL Ltd and Hutchison Max, a venture between Hutchison Whampoa and Max India -- plan a similar alliance.

Analysts said the agreements would be a major blow for Mahanagar Telephone Nigam Ltd, especially considering the rapid pace of growth in the cellular industry and the jump in call volumes per subscriber.

"MTNL so far has been getting this money virtually for free. This will be a blow for MTNL as the company was getting this money without spending anything," an analyst at a European brokerage said.

OPERATORS PAY MTNL

The four private cellular companies in Bombay and New Delhi now pay Rs 1.20 for a three minute or less call to MTNL for connecting calls from one network to another.

The cellular firms recover the interconnect charges from customers in addition to the regular airtime charges.

MTNL, of which the government holds 56 per cent, operates the fixed-line telephone service in Bombay and New Delhi. Earlier this year it launched its own cellular service in the two cities.

Bannerjee said he expected the interconnect agreement between Sterling and Bharti Cellular to be signed later this week. "But we have not decided what tariffs we will be charging," he said.

Girish Rangan, chief executive officer of BPL Mobile Communications in Bombay said his firm's interconnect agreement with Hutchison Max was expected to be signed next month.

"But we're yet to decide if we will charge the customer either the full amount, something in between or nothing for it. That decision will be taken later," Rangan said. Industry officials said cellular operators in other parts of the country were also expected to forge similar interconnect pacts which could hurt state-owned telecoms behemoth Bharat Sanchar Nigam Ltd.

"It will be the trend in a few months," said T V Ramachandran, secretary general of the Cellular Operators Association of India.

BSNL is the country's largest telecoms firm providing fixed-line telephone services across the country except in Bombay and New Delhi.

Tell us what you think of this report