Excerpts from an interview with Siddharth Zarabi.

On reports that MTNL was considering a GDR issue

It was one of the options in the process of consideration. We had refused the cross holding idea at the first shot itself, as we are not interested in being with Videsh Sanchar Nigam Ltd. On the GDR, I feel that it was premature for such an issue, given a number of factors including the fact that we would have ended up tapping the same markets in direct competition with VSNL. The third alternative of buyback was finalised, even though the time taken for completing that process may also be more.

Proposed buyback of shares

Wehave yet to receive the clarifications on the buyback issue and it now seems that the process of buyback may spill over to the next fiscal as there is very little time left. SBI Caps (overseeing the buyback) have said that it will take 66 days to complete the process. The issue of how the dividend will be treated-as a surplus or otherwise, needs to be sorted out. If I treat it as buyback-it is capital loss, meaning that tax benefits will accrue. The stamp duty issue also awaits government clearance, as we would get an exemption of Rs 2 crore on that. We also await the SEBI certificate for the format for solvency certificate.

On the buyback price

No final decision has yet been arrived at on the pricing of the buyback, but I feel that it may be slightly lower than the market value - some 5 per cent lower. But, the buyers price is a variable feature related to the market , the core group had only suggested a sellers price of Rs 176. The final price will be announced at an EGM, followed by 10 days ofbook-building after the EGM.

Features of the Internet service

The soft launch is underway at the moment and is getting a good response. 5000 connections will be offered commercially from February 9. Orders for equipment of 20,000 connections have already been placed. We are now concentrating on the important aspects of access, increased bandwidth and value additions like localised and differentiated content.

Access features

The Internet access for dial up customers for both Delhi and Mumbai is 172230, for ISDN customers the access code is 4694444 and for Mumbai users 4339696. We are concentrating on improving access by looking at the proper setting up of external plants so as to enable connection at 28.8 kps and also condition the insulation display points to the level of an ISDN connection, in order to avoid problems in the last few metres of the connection up to the consumers computer. Once the volume of customers builds up to a certain level later, we may also provide directaccess.

Bandwidth increase

The point of presence (PoP) of the equipment is at Kidwai Bhawan in Delhi and Prabha Devi exchange at Mumbai. This will have interconnectivity of 2 megabyte (Mb) link with a standby link of another 2 Mb for 5000 customers at present. This will be increased later on as VSNL will double the 45 Mbps links to provide larger bandwidth. In addition, the Internet traffic will be routed separately to remove traffic congestion. The trick is in the fact that local telephone exchanges will recognise the dialled Internet number and route it to the VSNL gateway through the PoP. The concentration will be 1:10, with 480 ports for 500 connections.

Localisation of content

We are looking at high-revenue areas like E-commerce and online education. A consultant is being appointed in order to provide specific inputs for this, as we are aiming at youngsters as potential customers.