MTNL, VSNL in round 2 of bidding for Suntel

NEW DELHI: Mahanagar Telephone Nigam Ltd (MTNL) is in negotiations to buy out Sri Lanka’s premier telecom operator Suntel. The PSU’s bid to acquire the Lankan fixed-line operator has crossed the first hurdle: “We are amongst the companies that have been shortlisted by Suntel for the sale,” MTNL CMD RSP Sinha told ET.

Sri Lanka’s John Keells Holdings, Telekom Malaysia and Tatas-owned VSNL are learnt to be some of the other companies which have also been short-listed for the Suntel sale, although this could not be independently confirmed.

Suntel is a JV between Swedish telecom giant Overseas Telecom, Metrocorp, Townsend of Hong Kong, National Development Bank, and International Finance Corporation (IFC) — a member of the World Bank Group. It is the largest fixed-line competitor to incumbent Sri Lanka Telecom (SLT) and has a subscriber base of under 300,000. Suntel offers a range of voice, data, ISDN, dedicated packet solutions and internet services.

According to MTNL sources, the company was in the process of appointing a consultant to carry out due diligence of Suntel. The PSU will place a bid for Suntel after going through the books of the company.

Analysts share the view that Suntel’s parent Telia of Sweden is looking at a steep price of about $200 million to exit the company. Suntel had announced provisional profits of 886 million (Sri Lankan) rupees in 2006 and a turnover of 7,073 million rupees, compared to 4932 million rupees the year before. Besides in the six months to December, Suntel had registered profits of 595 million rupees against revenues of 3,763 million rupees.

Meanwhile, MTNL today announced that that it had registered 47.08% increase in net profit at Rs 206.32 crore for the quarter ended March 31, as compared to Rs 140.27 crore for the same quarter last year. However, the company’s revenues fell by a little over 13% to Rs 1,386.07 crore during this period, as against Rs 1,594.51 crore for the quarter-ended March, 2006.

Explaining the dip in revenues, Mr Sinha said that in Q4, 2005-06, the company had made a one-time recovery of Rs 350 crore from other operators. If this component was not considered, then revenues recorded in last quarter are much higher,” he said.

“We have increased our profits despite the decline in tariffs on account of impressive growth in both Delhi and Mumbai. Another factor which contributed to the profit is the decrease in operational expenses” Mr Sinha added.

Again, for the year ended March 31, MTNL has registered a net profit of Rs 643.12 crore as against Rs 580.29 crore for the same period in the previous year. Its total income was down to Rs 5,530.69 crore for the year ended March 31, from Rs 6090.99 crore, the previous year.

joji.philip@timesgroup.com