DoT has also issued ISP licences to Ortel Commn (C) - Bhubaneswar, Rolta India (B) - Mumbai, Surevin Consultants (C) - Ghaziabad, United Internet Commn (C) - Jaipur, Bareilly Commn (C) - Bareilly, Paliwal Financial Services (C) - Karnal, Somani Overseas (C) - Surat, Arun Girija Commn (C) - Patna, Kinjaru Appliances (C) - Rajkot, Eleclipse Networks (B) - Ahmedabad, Weikfield Mnemonix Infonetworks (B) - Pune, SNC Infotech (C) - Ghaziabad, Zaverchand Cyber Infotech (C) - Vaadodra, Srishti Open Systems (C) - Trivandrum, Sukhkarta Fin Trade (A) - All India, Trikon Electronics (B) - Mumbai, Suchibh Communications (C) - Satara, Satyam Infoway (A) - All India, SK Digital Technology (C) - Durgapur, and CSProsof Tech Informatics (C) - Madurai.

Analysts said that MTNL, which provides two-way connectivity through its basic services, was likely to have an upper hand over other ISPs. Chairman and managing director S Rajgopalan has said that its Internet subscribers will not have to pay for the phone units used for surfing the Net.

MTNL, with a captive base of over 32 lakh customers in Mumbai and Delhi, is slated to club the Internet usage and phone-line bill, and deduct from the bill the time the phone has been used to surf the Net. It will provide connections at a low deposit rate of Rs 3,000, the amount charged for an ordinary telephone line. It plans to ensure a 1:10 ratio pertaining to phone lines and connections.

MTNL has announced setting up of "cyber dhabas" to allow the common man to access the Net at nominal rates.

According to analysts, at present, basic-telephony rentals and long-distance telephony (domestic and international) contribute 17 per cent and 70 per cent respectively to MTNL'srevenues. Assuming that the recent Telecom Regulatory Authority of India (Trai) recommendation pertaining to increased rentals and slashing of long-distance telephony rates are accepted, MTNL will be more or less revenue neutral.

However, considering that rentals might be increased by only 15-20 per cent, and with no sizable cut in long-distance telephony rates in the offing, MTNL might see its revenues falling. Its annual fixed expenses per line are over Rs 3,700, which include a licence fee of Rs 900 per line paid to DoT.

Its per-line installation cost exceeds Rs 22,000, and MTNL depreciates its plant and machinery at 11.3 per cent. Residential subscribers contribute Rs 2,280 per line as annual revenue. This means that MTNL has been making a loss on its marginal subscribers. Moreover, a rising subscriber base has been consistently eroding operating margins.

MTNL sources said that all this would change with the proposed tariff revision, wherein marginal subscribers would contribute more throughbi-monthly rentals.

SP foray will buoy profits

There is no denying that MTNL's foray into a value-added service like the Internet will prove crucial in buoying future profits. This is where the recent acquisition of an ISP licence from DoT augurs well, more so since now the company is in a position to leverage its strong fundamentals and infrastructure to good effect.

MTNL has a captive subscriber base of over 32 lakh customers in Mumbai and Delhi. The company's infrastructure is beneficial in terms of two-way connectivity through its basic services. All this has put MTNL in a position to offer value-added services like a free phone unit, separate billing for net usage, and cheap connectivity at a low deposit rate of Rs 3,000, thus merely enhancing its competitive advantage.