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'New licences to boost MTNL income'

New licenses to offer fixed-line telephone services in nine Indian states could significantly boost the revenue of state-run telecom firm Mahanagar Telephone Nigam Ltd, Cazenove & Co said.

In a research report dated February 9, the securities firm reaffirmed its buy rating on MTNL, saying it was enthused by the quick response of MTNL management to opportunities created by the changing regulatory framework.

Earlier this month, MTNL filed applications with the government for licences to begin offering fixed-line service in nine states, a quick response to the government's decision to open basic telephone services to an unlimited number of companies.

The report said MTNL's growth was currently handicapped due to its limited operations in just two cities. MTNL now provides fixed-line and Internet access services in New Delhi and Bombay.

But this handicap would be effectively addressed if MTNL succeeds in obtaining new licences, it said.

MTNL has bid for Andhra Pradesh, Karnataka, Tamil Nadu, Kerala, Rajasthan, Maharashtra, Punjab, Haryana and Uttar Pradesh.

Cazenove said these were areas with high potential, with on average just 3.5 per cent of the population currently fixed-line subscribers. A vast number of people, equivalent to 19.2 per cent of installed capacity, are on waiting lists, according to the brokerage.

In mature markets like New Delhi and Bombay, 13 per cent of the population are fixed-line subscribers, it said.

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