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December 30, 1998

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I'll take Madras and Calcutta. MTNL bids to buy out phone networks of the next two big metros.

Big is beautiful. But bigger is better.

Mahanagar Telephone Nigam Limited is the basic telecom services provider in New Delhi and Bombay. Now it wants the next two metros of Madras and Calcutta.

Email this story to a friend. But this is not a mere wish. MTNL is ready to put its money where its mouth is.

Rs 55 billion, to be precise.

T O D A Y
I'll take Madras...
Compaq On-Call
Airbus is shopping
Disinvestment in VSNL
But will the Department of Telecommunications that 'owns' Madras and Calcutta, sell?

Moot question.

Here much will depend on the government that owns both, the DoT and MTNL. Squabbling siblings seems to be the order of the day, post-liberalisation, that is.

The MTNL proposal is an issue of 100-200 million shares worth Rs 18-36 billion to the government and settlement of the remaining amount in cash, government sources reveal.

This may be announced in the new draft national telecom policy that may be finalised before February-end.

The central government is considering transferring the Madras and Calcutta basic telecom networks to MTNL on a request from Tamil Nadu Chief Minister M Karunanidhi although DoT had earlier rejected the proposal.

The West Bengal government is also supportive of the move.

DoT brass is, however, stoutly opposing the transfer of the two networks to MTNL. DoT officers feel that such a sale may take the prime revenue-generating areas out of its network.

There was considerable heartburn within DoT when MTNL was spun off in 1986.

The Rs 47.8 billion MTNL has surplus cash reserves of Rs 9-10 billion this fiscal.

This follows a shortfall in projected capital expenditure on account on delays to its plans to set up cellular networks in Delhi and Bombay.

It had budgeted an expenditure of Rs 22 billion this year but expects to spend only Rs 11-12 billion.

Given a cash reserve of Rs 21 billion, this represents a surplus of Rs 9-10 billion. Even keeping aside an earmarked Rs 5 billion for buyback of its shares from the market. This leaves some Rs 4-5 billion in cash with the company.

"Along with next year’s surplus (that is expected to be another Rs 20 billion or so), the reserves will help fund the transfer of the assets," sources explain.

Earlier:

- Compiled from the Indian media

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