New Delhi: A two-day strike last week by executives at Mahanagar Telephone Nigam Ltd, or MTNL, shone the spotlight on the state-run phone services provider in New Delhi and Mumbai, which has steadily seen its revenues and profits erode in the five-six years as consumer preferences moved to cellular phones and private mobile phone service providers.
Catching up: Sinha says MTNL’s market share has increased to 16-17% in the last five years, with around 4.4 million mobile customers. Ramesh Pathania / Mint
MTNL, which has a 71% and 60% share of the fixed-line phones in Mumbai and New Delhi respectively, will renew its focus on such wired phones that allow it to provision broadband and other value added services helping it increase revenues and profits, says company chairman and managing director R.S.P. Sinha in an interview. Edited excerpts:
Tell us of the impact of the strike?
There were some issues, which got blown out of proportion. But, one effect of the strike was that people realized that MTNL is still the core of communication services in Delhi and Mumbai. People would say that everybody (private telecom operators) is great except MTNL. Today they are saying that yes MTNL is still the backbone.
We told the agitating employees that there would be a permanent loss to the company if they continued.
Mumbai was not disturbed by the strike as the largest number of employees who are in group C and D (more than 40,000) did not join the strike. Only group B was on strike. They felt that their stake in the company is more and if the company starts incurring losses then their livelihood will be affected.
One major challenge for MTNL is that we have a staff strength of 47,000. When we started, the staff strength was 62,000 and my salary and wage bill is 48% of revenues. It is six or seven percent for the private companies. The removal of the pension liability by the government would be a great help. My target is to increase revenue by at least 10 to 15% over the previous fiscal.
MTNL’s revenues and profit margins have been falling…
If you analyze the books over the years – in 2002 and 2003, the salary and wage bill was Rs1,000 crore. Today it is more than Rs2,200 crore. This increase by over Rs1,200 crore has hit my profit margins.
Today in USA, employees in companies are voluntarily reducing their salary and wage bill in order to ensure the company survives.
Today, PSU employees are not paid any less that their private sector counterparts.
There are examples where we have paid as much as Rs30 lakh for the medical treatment of a mid-level employee’s wife. This cannot be done in the private sector.
Being a listed PSU, our financial implications are more as we have to make a provision for gratuity, pension, provident fund etc on an actual basis.
Tariffs have also fallen. In 2002-2003, STD rate was Rs 27 a minute between Delhi and Mumbai and a one-minute call to the US was $2.2.