MTNL stops offering new connections in Mumbai

NEW DELHI: State-owned telecom firm MTNL has stopped offering new mobile connections in Mumbai as equipment supplier ITI has failed to expand the capacity, contracts for which were placed over an year ago under the reserve quota for public sector firms.

MTNL has about 15 lakh mobile subscribers in Mumbai but has no more connections to offer and has stopped advertising for its cellular services Dolphin, highly-placed sources said. All investment plans to increase base stations have been put on hold, they added.

The PSU is likely to hold its board meeting in the first week of September to take an urgent action in this regard.

ITI, who has a technical tie-up with French vendor Alcatel, was given the order to add capacity more than a year ago under the reserve quota started by former telecom minister Dayanidhi Maran.

Sources said MTNL had opposed Maran's move of offering 30 per cent contract order to a PSU on the ground that MTNL has only two circles, Delhi and Mumbai, and it was not feasible to implement the reserve quota system as in case of another PSU Bharat Sanchar Nigam Ltd (BSNL).

Maran, however, had refused to accept MTNL's plea, an official said, adding "we are paying a price of being a PSU as it never happens in the private sector". Several reminders have been given to ITI but this has been of no use.

After Mumbai, US equipment supplier Motorola was given the contract for Delhi in October 2006, and the company has already laid the capacity.

In Delhi, MTNL is adding 1800-1900 new mobile subscribers every day and has more than 13 lakh users, officials said adding "MTNL can give new connections as much as demand is there." The telecom PSU is also a victim of reserve quota in its broadband services for it had placed the order with ITI for Mumbai circle.

"We are losing over Rs two crore in revenue each month as equipment vendor ITI has failed to put up new broadband capacity in Mumbai," they added.

Due to shortage in capacity, the PSU is not able to add nearly 40,000 broadband connections to 2.53 lakh it currently operates. This translates into a monthly loss of Rs two crore, going by the Average Revenue Per User (ARPU) of over Rs 500 as in the broadband segment as claimed by MTNL. They said ITI's failure in adding to the capacity could take away the advantage from MTNL of first mover in broadband.