MTNL and BSNL should stay away from 3G: analysts

Published Date
11 - Aug - 2009
| Last Updated
11 - Aug - 2009
MTNL and BSNL should stay away from 3G: analysts
When you and I joke about how MTNL and BSNL are not suited for the Internet-ready mobile service carrier landscape, it’s worth a few laughs. But when analysts at top research firms write that in their report, it’s time to sit up and take notice.
HSBC Securities and Ascentius Consulting – two highly respected research analysis firms – have publicly stated that the public section telecom companies should steer clear of 3G technology and instead concentrate on their fixed landline broadband services.
The reasons cited are two-fold: first, that pursuing 3G will strain the finances of both BSNL and MTNL; and second, that neither company has the kind of consumer base who would use the new services. The duo have got spectrum ahead of private players and will have to match the highest bidder.
“In our view, it makes no business sense for MTNL to match the highest bid for 3G spectrum auctions and incur capital expenditure to upgrade its network,” HSBC Securities analyst Rajiv Sharma said, in a report. He added that the company’s plans to involve global telcos would not be beneficial as MTNL’s state-owned enterprise culture would restrict them.
MTNL is better placed to leverage its fixed line infrastructure for wireline broadband products, the report said.
According to Ascentius Consulting principal analyst Alok Shende, the companies have attracted price-sensitive, low-minutes of usage subscribers who do not use value-added services and would find no use for 3G.
In the six months of its 3G launch, BSNL has roped in just 10,733 subscribers. The figure for MTNL stands at a dismal 902, an average of just 150 per month across Mumbai and Delhi, considered the two most lucrative circles for 3G in India.
BSNL CMD Kuldeep Goyal, however, denied that the company will face any financial pressure on account of 3G and said response has been good so far. 

Mihir PatkarMihir Patkar