NEW DELHI, July 29: The Telecom Commission has turned down the proposal that the Chennai and Calcutta telecom circles be handed over to the Mahanagar Telephone Nigam Limited (MTNL) - in addition to the Delhi and Mumbai ones that it already has.

MTNL was keen on getting these two circles as, apart from other advantages, it would also help boost the price of their forthcoming GDR issue.

The Telecom Commission has argued that if all the four metros are given to MTNL, this would mean that the Department of Telecommunication (DoT) would be left wiht only "B" class cities and would have a very weak portfolio.

This would also make it difficult to corporatise the DoT in future. When DoT is corporatised, it is proposed that its policy making functions will be given to the Ministry of Communications.

The low revenues of these "B" or "C" category towns would make it difficult for DoT to raise funds in the future. Besides, DoT will also be stuck with the rural areas where investments do not yield high returns.

Officials argue that any meaningful restructuring exercise would have to look at these aspects and then divide the existing circles making a proper mix of metros, large and small towns and the rural areas so as to ensure that revenue surpluses from one side can be offset by low return investments on the other to prevent any corporation from going into the red.

Financial experts, however, seem to favour the inclusion of all four metros under the MTNL umbrella especially on the eve of the MTNL GDR issue in which such a move would have fetched them a higher price. Besides, they argue that this would enable upgradation of networks and the provision of Value Added Services.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.