By Sreejiraj Eluvangal
New Delhi: Shares of Mahanagar Telephone Nigam Ltd (MTNL) fell nearly 10% to Rs152.35 in the two hours of trading after the goverment-run telecom service provider in Mumbai and Delhi announced less-than-expected net profit for the year to 31 March.
MTNL posted a 47.08% increase in net profit to Rs206.32 crore for the fourth quarter of fiscal 2007 against Rs140.27 crore in the year-ago period.
The firm’s total revenues decreased 13.07% to Rs1,386.07 crore for the quarter ended 31 March, from Rs1,594.51 crore in the same quarter a year ago, as its average customer billing for mobile and fixed-line customers shrank, and the fixed-line phone subscriber base did not grow.
The beating down of the shares came despite MTNL’s full-year profits jumping by Rs64 crore or 11.05% to Rs643 crore, even as full-year revenues slipped 6.2% to Rs5,531 crore. “The rise in profit is not to the extent as was expected,” said Sheriar Irani, head of research at Mumbai-based brokerage ASK Raymond James.
He said the rise in 2007 net profit should have been higher as MTNL had a one-time payment of Rs410 crore that it had to pay Bharat Sanchar Nigam Ltd last year. “The beneficial impact of the absence of such a huge exceptional item should have reflected in a better performance,” Irani said.
MTNL was able to double the number of high-revenue, broadband customers in 2006-07, from 2.1 lakh at the end of 2005-06 to 4.7 lakh by March, making up nearly 10% of its fixed-line phone users.
The company’s chairman and managing director, R.S.P. Sinha, said he expects MTNL’s profits to recover with the planned launch of high-speed third generation or 3G services in the mobile-phone segment. “We think adding value-added services to voice will reverse the trend,” he said.