Case Study Mahanagar Telephone Nigam Limited Marketing Essay

August 18, 2017 Marketing

Mahanagar Telephone Nigam Limited is an Indian Government-owned telephone service supplier in the metro metropoliss of Mumbai and New Delhi in India. The company was a monopoly until 1992, when the telecom sector was opened to other service suppliers.

MTNL provides fixed line telephones, cellular connexion of both GSM – Dolphin ( Postpaid ) and Trump ( prepaid ) and WLL ( CDMA ) – Garuda-FW And Garuda-Mobile and cyberspace services through dialup and DSL – Broadband cyberspace TriBand. MTNL has besides started Games on demand, picture on demand and IPTV services in India through its Broadband Internet service called Triband. Phone Numberss belonging to MTNL start with the prefix 2 infixed line telephones and WLL & A ; in GSM Mobile services start from 901x/ 9868/69 / 9968/69. MTNL besides provides other services such as VPN, Internet Telephony- VOIP and leased lines through BSNL and VSNL.

MTNL has been actively supplying connexions in both Mumbai and New Delhi countries and the efficiency of the company has drastically improved from the yearss when 1 had to wait old ages to acquire a phone connexion to now when 1 can acquire a connexion in even hours. Pre-activated Mobile connexions are available at many topographic points across both Metros. MTNL has besides unveiled really cost-efficient Broadband Internet entree programs ( TriBand ) targeted at places and little concerns. At present MTNL enjoys the largest of the market portion of ISP services in Mumbai and Delhi.

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India ‘s First 3G Mobile Service By MTNL

MTNL started 3G services in India under the name of “ MTNL 3G Jadoo ” Services offered include Video call, Mobile Television and Mobile Broadband with high velocity informations connectivity up to 2 Mbit/s velocity from 11th December 2008, acquiring India on the 3G map of the universe. MTNL plans to offer 3G services across India by mid-2009. After that MTNL Mobile users would be able to surf the cyberspace with velocities up to 2 Mbit/s on their smart phones. MTNL besides provides informations cards for surfing cyberspace on the Personal computer and Laptop at 3.6 Mbps. MTNL will be put ining 15 lakh 3G lines in the first stage of its 3G roll-out in Mumbai and Delhi ( which presently have 40 lakh bing nomadic lines ) .

Assorted hazards to MTNL

Market RISKS

The telecommunications market in the metropoliss of Delhi and Mumbai are among the most competitory markets. MTNL faces intense competition from the other Mobile operators and the basic service operators. This has led to an increased force per unit area on borders due to cut downing duties and besides on the client keeping and acquisition. The Average gross per user is besides traveling down. With new operators coming in Delhi and Mumbai, such competitory force per unit areas are likely to increase farther, seting a farther strain on the borders. Recently DOT has issued LOIs to a figure of new participants which will take to increased competition to market portion. MTNL is confirmed merely in two metropoliss i.e. Delhi and Mumbai, hence MTNL is non able to spread out its telecom services beyond its country of legal power.

Policy AND REGULATORY RISKS

The telecommunications sector in India is one of the highest taxed sector. The high degree of license fee is a large strain on the fundss of the company. This is paid over and above all other revenue enhancements and responsibilities which are levied on all other concerns. Regulative policies can non be foretold and may at clip, be such as to impact the financials of the company.

MANPOWER RISKS

There is a immense work force and about 32 % of gross is spent on staff. In comparing of the staff costs of other operators, it is about 7 % of the grosss. This is a major hazard which the company faces, as it has small flexibleness in the affair and may hold to go on to transport the cost. It may in fact go even higher as pay dialogues are now due as per the earlier pay understanding which was for 10 old ages. Sing the enormous growing of private sector and chances that have become available and handiness of employment in telecom & A ; IT sectors, keeping of suited work force is a large challenge. There is 20 % abrasion rate among the immature executives recruited for specialised occupations.

OUTSTANDING Due

Over the old ages, the sum owned to MTNL by its clients had been increasing and accumulated significantly. Realization of dues from clients has become even more hard in the progressively competitory telecom market as the clients can shut the connexion and take services of other operators. Attempts are being made to cut down the outstanding and some success has been achieved in conveying down entire outstanding in a multi operator environment, this hazard remains.

Poor runing public presentation continues

Mahanagar Telephone Nigam Limited ( MTNL ) grosss and net incomes continued to skid in the one-fourth.

The fixed-line section continues to shed blood: MTNL ‘s wireline clients decreased by 1.5 % qoq to 3.75 manganese. Despite the bundling of services, the Company is unable to stem the bead in ARPU and loss in endorsers. Consequently, wireline gross dropped 3.2 % qoq to Rs. 7.6 manganese.

Disappointing public presentation in the cellular section: Mobile gross besides fell by 3.0 % qoq to Rs. 2.1 bn on history of skiding ARPUs. For pre-paid clients, ARPU continued to skid for the Company with a bead of around 13 % . Furthermore, the Company ‘s endorser add-on grew merely by 6.1 % qoq, compared with the add-on of ~10 % qoq for the overall Industry.

Margins continue to stay under emphasis: The Company EBITDA borders dropped by significant 500 bits per second qoq on history of a rise in staff cost station pay alteration. We continue to believe that the Company ‘s borders will drop about 15 % for FY09 owing to a loss of high ARPU fixed-line concern and growing in low ARPU Mobile concern. Besides, immense work force will go on to drag the borders due souths.

Rival Hazard: Tata Teleservices Limited and Reliance Infocom Limited are presently viing with MTNL in the market for basic services in both Mumbai and Delhi, and Bharti Tele-Ventures Limited is besides viing with mtnl in the basic services market in Delhi. All of these companies already have important telecommunications substructure in Delhi and Mumbai, including, with regard to Tata Teleservices and Reliance Infocom, low-priced CDMA Mobile and fixed radio engineering. With about 62.52 % of their call units holding come from about 18.39 % of our entree lines in service, they are peculiarly vulnerable to losing market portion if these or other new operators sharply target their largest endorsers. Some of their largest clients have already migrated to other basic service operators.

Assorted hazards faced by Telecom sector

Regulation and conformity: A The regulative authorization in India has delayed the 3G auction and sets up new guidelines every now and so. It has besides given 3G licence for BSNL without giving it to other suppliers. Airtel and Vodafone which has launched iPhone 3G phone were left in the dark with 3G phones without any 3G service.

Entry of 4-5 playersA : Licenses were granted to 6 new participants. Unitech, Sistema, etc.. Sitema has started its operations under the name of MTS by supplying 1 million proceedingss free. New participants and offers like these would earnestly dent the enlargement programs of established participants. All the participants should believe out of the box and come up with IDEAS. Following thing would be consolidation in the industry which is already go oning in the telecom tower concern.

Capital for enlargement: This is the biggest standards for smaller participants. While there are no smaller participants, as the new participants are backed up by some heavy-weights, enlargement is still tough. This is where sharing substructure comes into image. Indus Towers is one such illustration. BSNL has late announced about renting its towers. Enterprises like these will assist both the older and newer participants to perforate into new markets.

Attracting and pull offing endowment and rational capital: This is a tough 1. With ferocious competition comes the endowment poaching. Companies should hold some endowment keeping steps in topographic point. Airtel has restructured its concern into 9 verticals to retain endowment. Not every company can make the same but, that is one option.

Management of strategic partnerships: Supplying free SMS ‘s or name rates at 40 paise per minute are no longer the discriminators. It is the value Added services which matter. There were clump of partnerships which happened in the last 2 months. AskLaila- Airtel partnership for local hunt, Amar Chitra Katha – Vodafone, IDEA and Bharat Matrimony have tied up for VAS. BSNL has late tied up with Hungama portal for music and game downloads. Strategic partnerships like these should be nurtured and maintained.

Inappropriate procedures and systems to back up exponential concern growing experienced over past 4-5 old ages: This is where puting in IT and the right tools is important. These are the operations that should be outsourcing so that the telecom companies can concentrate on their nucleus countries. Indian telecom companies should outsource sharply and concentrate on spread outing their web and services.

Forecasting returns from engineering and substructure investings

Privacy and security hazards

Contain and cut down costs

Manage consolidation and amalgamations & A ; acquisition: This would bind back to indicate # 2 of entry of new participants and a possible consolidation in the telecom concern and the tower concern.

Corporate societal duty and sustainability: With the Satyam cozenage jaring India Inc, this would be high on the radio detection and ranging for the companies.

Lack of protection for digital rational belongings: This could be following for Indian telecom. Too shortly but might take 2-3 old ages for this to go a hazard

Concentration of equipment makers: Sourcing from a individual provider or a clump of provider could take to great dependence. Satyam cozenage has merely shown the universe how dependent one can go on the outsourcing services. Same instance will be applicable to the telecom companies. For illustration, Reliance beginnings most of its equipment from ZTE – a Chinese company. This is a possible hazard.

Investing hazards: Investing is necessary for bettering telecom sector public presentation. And investing hazard is the primary determiner in doing investing determinations. Investors consider/face hazards related to three wide environments: a ) macro-level state hazard, associated with factors that frequently affect the full economic system such as rising prices, foreign exchange fluctuations, and political stableness ; b ) market or commercial hazard, associated with factors related to demand and supply, handiness of replacement merchandises, and the public presentation of rivals ; and degree Celsius ) regulative hazard, emanating from authorities action, including but non limited to, actions of the regulative bureau with authorization over the telecom sector.

Risk Management techniques used by MTNL

Hazard is the ultimate four-letter word of concern, investing and authorities. Entrepreneurs and political leaders understand every bit good as anyone that if nil is ventured, nil can be gained, and that hence hazard can ne’er be wholly eliminated. However, the attempt to minimise, or at least manage hazard, has become a major focal point of most corporate entities, and it ‘s standard pattern for public companies to unwrap their operating hazards each one-fourth in their public filings.

The first, turning away, can be every bit simple as non prosecuting in activity that produces the hazard, but this non merely eliminates hazard but possible benefits every bit good. Hazard decrease through concrete stairss is far more common, and the particulars will be related to the type of concern and hazard involved. Hazard transference is besides extremely good as when an available option ; it involves outsourcing the job to another entity such as through the purchase of insurance. Finally, hazard keeping is inevitable in some instances where the hazards are either improbable, or the costs of extenuating or reassigning the hazard are prohibitory.

Alternatively of depriving a interest as a one-shot, revenue-raising trade, induct a strong spouse to construct services and grosss.

Serve user demands, alternatively of offering ‘products ‘ with some internal geographic or technological definitions that are non easy understood.

Apologize services like EVDO cards ( broadband informations cards ) that are non customer-centric, because if they work in the remainder of the state, they do n’t in Delhi and Mumbai and frailty versa.

MTNL could travel for collaborative data-streaming with 2.4 Mbps EVDO cards useable everyplace, offered with a service degree and manner that can merely come with a hands-on spouse altering the off-putting manner MTNL dainty customers.A

Get politicians out of procurance, and induct engineering like radio corDECT at 512 Kbps for rural countries if appropriate, even if it is ‘old ‘ and non state-of-the-art, alternatively of waiting for old ages for options that are n’t at that place of 3G or LTE ( Long-run Evolution or 4G ) , and will be much more.

Move up to 3G/LTE after some old ages of bring forthing net incomes.

Work with India ‘s engineering companies to construct local equivalents of Hawaii and ZTE, with India ‘s assured markets. ( This requires policies far beyond the scope of the DOT, as in the manner China has nurtured Hawaii/ZTE for old ages. )

Post effects of application of hazard direction techniques.

Minister of State for Communications and Information Technology, Jyotiraditya M. Scindia announced that the market portion of province owned telecom biggies Mahanagar Telephone Nigam ( MTNL ) and Bharat Sanchar Nigam ( BSNL ) had decreased. Harmonizing to bureau beginnings, while landline connexions of BSNL and MTNL command a market portion ofA 78.82 % and 9.32 % severally, the nomadic connexions of both the Public Sector Undertaking stand at 14.14 % ( BSNL ) and 1.28 % ( MTNL ) severally. Thus the combined landline connexions of these two PSU`s stand at 88.14 % while the nomadic connexions stand at 15.42 % . Beginnings disclosed that the market portion of MTNL and BSNL had decreased due to theA surrendering of extra landline phones and penchant for nomadic phones and customer`s penchant for Mobile and landline phones from different service suppliers.

In instance of MTNL, to be precise sourcesA said that there were capacity restraints in its GSM Mobile web due to non-commissioning of 75,000 million lines each in Delhi and Mumbai by the sellers. Beginnings besides added that during the past two old ages, sufficient capacity in GSM nomadic equipment was sub-judiced and there was hold in supply of equipments.

Following TRAI permission for basic operators to supply limited mobility, MTNL launched its Wireless in Local Loop ( WiLL ) service branded ‘Garuda ‘ in December 2001. By pricing monthly leases and sedimentations competitively, MTNL has increased the attraction of the service. While incoming calls are free of cost, surpassing calls are charged at the rate of Rs 1.20 per minute, which is besides the opinion basic telephony charge. There are two options. One, on a security sedimentation of Rs 5,000, MTNL would supply the instrument and on the resignation of the instrument, the security sedimentation would be refunded. The other option is for the endorser to purchase the French telephone from the market with no security sedimentation. The French telephones are already available in the market and one can anticipate rates to fall in the coming old ages. The monthly lease at Rs 450 is the same for both the options.

But the cardinal cause of concern is the net incomes chances. Since Mumbai and Delhi are metropoliss with high tele-density, subscriber base growing is expected to be on the lower side. While duty restructuring has increased paid-minute calls, it is non commensurate with the autumn in duties. Besides, in such a extremely competitory environment, pricing is non a sustainable differentiating factor. As clients become more and more sophisticated, telecom big leagues will hold to better service degrees and bundle value-adds. MTNL ‘s future chances rely on its disinvestment. The new spouse could convey in the proficient expertness and demo the manner for the company. But even here, there is a trouble. With more than 60,000 employees, which the direction assumes as its biggest plus ( “ The human strength is the greatest strength for MTN, one has to be cautious. To increase attraction, the authorities might make up one’s mind to snip work force to a manageable degree before disinvestment.

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