‘Tariffs are at rock bottom’ | business | Hindustan Times
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‘Tariffs are at rock bottom’

Kuldeep Singh took over as Chairman and Managing Director (CMD) of public sector Mahanagar Telephone Nigam Ltd (MTNL) last Friday as R.S. P. Sinha ended his tenure amid challenges involving revenue growth and competition from private players. He spoke to Hindustan Times about his strategy.

business Updated: Jan 18, 2010 21:33 IST
Manoj Gairola

Kuldeep Singh took over as Chairman and Managing Director (CMD) of public sector Mahanagar Telephone Nigam Ltd (MTNL) last Friday as R.S. P. Sinha ended his tenure amid challenges involving revenue growth and competition from private players. He spoke to Hindustan Times about his strategy. Excerpts:

On the challenges ahead

Our biggest challenge is to maintain revenue growth in view of tariff drops. We are adding new customers in GSM (mobiles) while fixed line customers are surrendering connections. We need three or four new GSM connections to make up for the loss of every fixed line.

Another problem is that we are present only in Delhi and Mumbai. For long distance telephony, we are dependent on Bharat Sanchar Nigam Ltd (BSNL). Due to the existing tariff war, we get less revenue. However, we pay charges to BSNL, which impacts profitability.

The increasing wage bill is another big issue. Last year, our wage bill was 45 per cent of the operating revenue. It is beyond our control. It will increase further as we have to implement new pay scales.

On further decline in tariffs

I think currently tariff is at rock bottom. Ultimately, customers will go for quality and MTNL is a tested brand.

On VRS to retire surplus staff

We have offered VRS (voluntary retirement scheme) twice in the past and nearly 4,000 employees opted for it. However, once an employee opts for VRS, his pension liability falls on us. In other PSUs, the pension liability is on the government.

On expansion plans

We will add a capacity of 1 million GSM connections this year and another million in the next financial year. In broadband, we will add a capacity of 500,000. We will explore opportunities in Africa and (also) participate in the new licences there.