PEST ANALYSIS

MAHANAGAR TELEPHONE NIGAM LIMITED

MTNL was set up on 1st April, 1986 by the Government of India to upgrade
the quality of telecom services, expand the telecom network, introduce new
services and to raise revenue for telecom development needs of India’s key
metros – Delhi, the political capital and Mumbai, the business capital of
India. In the past 17 years, the company has taken rapid strides to emerge as
India’s leading and one of Asia’s largest telecom operating companies.
Besides having a strong financial base, MTNL has achieved a market share
of approximately 13% of the Indian telecommunication network with a
customer base of over 4.98 million lines.

The company has also been in the forefront of technology induction by

converting 100% of its telephone exchange network into the state-of-the-art
digital mode.

The Govt. of India currently holds 56.25% stake in the company.

In the year 2003-04, the company would not only consolidate the gains but
would also focus on new areas of enterprise viz. Joint Ventures for projects
outside India, entering into national long distance operation, widening the
cellular and CDMA-based WLL customer base,setting up internet and allied
services on all India basis.

VISION 2005 FOR MTNL

1.Internet Services
 1. Internet for all

2. Global Roaming
3. Virtual Private network

4. Premium Internet Service

5. E-commerce enabling services, by setting up of Payment Gateway &

Certification Gateway
6. Unified Messaging

2.Broadband Internet Access services

1. ADSL

2. Cable TV, through strategic alliance

3.Mobile Internet services

1. Internet Services via Mobile phone with up to 9.6 Kbps bandwidth

2. E-commerce
3. Global Roaming
4. High speed Mobile Internet services

4.IP based Voice services.

5.IP Services in PSTN

Call waiting Internet Busy

6.International Gateway Leasing Services

7.Internet Exchange Connectivity Services

8.Expansion of Managed leased line data Services

9.ATM Services

1. LAN Emulation
2. ATM Bearer Service
3. High speed video conferencing
4. Distance Learning & Telemedicine
5. Bandwidth on demand
6. Video on Demand

10.Customer Care Services

1. New Telephone registration, Bill payment and complaint registration

through Internet
2. Smart Card for Payphone
3. Mediation Billing Customer care in GSM Mobile
4. Data Ware Housing
5. Voice Mail Service
6. Call Center

11.Wireless ATM Service

12.Expand operations

Beyond Delhi & Mumbai through strategic linkages with Basic, Cellular and
Internet companies either by tie-ups, taking major equity stake or by
acquisition. Tie up arrangement with ISP's for content as well as for co-
branded portals. Setting up of venture capital fund and R & D fund to
finance & encourage research institutions and IIT's for developing
innovative technologies.

ECONOMIC FACTOR
The areas served by MTNL are the two most advanced metros in the country
where a majority of business houses have either their headquarters of
activities or at least branch offices. MTNL with a market share of about 13%
of the National telecom Network, has a customer base of about 4.98 million
lines at the end of 2002-03. With the increased economic activity due to
liberalization, growth of lines is expected to be around 400,000 a year. The
opening up of the value added services is an area which will considerably
add to the prospects of MTNL due to greater utilization of the existing
network, for cost to the Company to provide connectivity for these services
will be very nominal.
The fact that MTNL possesses a vast network of operations and is a blue
chip cpmpany , has made the company's shares a favourite with investors.

MTNL MARKET SHARE IN TELECOM INDUSTRY

MTNL - A Blue-chip

Some of the factors that contribute towards making MTNL a blue-chip

company are :

1. Company providing vital infrastructure.

2. Sustained growth.

3. Increasing demand in a fast developing economy.

4. Tremendous resources and asset base.

5. Very high potential for value

6. Exciting developments in new services everyday

MTNL

For the Investors

Govt. of India has disinvested approximately 275.63 million shares

(including 70 million shares through GDR) upto 31.3.2002. MTNL’s
outstanding shares as an 31.3.2002 were 630 million (including 30 million
through GDR IPO) out of which Govt. of India owned 354.37 million shares
(56.25%). MTNL’s share is being quoted at about 15 times its face value.
The company also listed at the New York Stock Exchange (NYSE) on
7.11.2001.The following factors make it a success with the investors:

1. Share of a blue chip company

2. Assured dividend - High appreciation in stock value
3. High net asset value (NAV)

4. High growth in profitability

 5. Sustained increase in net worth

The company is now a Public Company in the United states and is subject to
very stringent requirements .MTNL is the 2nd Telecom Public Sector
Undertaking from India to be listed on the NYSE .The trading symbol of
MTNL on the NYSE is MTE.

MTNL has a strong financial base and has shown consistent improvement in
perform- ance over the years. It has market share of about 13 % of the
National Telecom Network.
MTNL posseses an impressive financial profile comprising of Paid Up
Capital of Rs.630 crores. Reserves and Surplus amounting to Rs.8309.64
crores and Fixed Assets worth Rs.5311.80 crores(as on 31.12.2003)

Financial Operations

The following operations have reinforced and strengthened MTNL's

resource base:

Disinvestment/GDR/ADR

Telephone Bonds

Capital Expenditure

Disinvestment / Global Depository Receipts

MTNL is amongst the foremost public sector undertakings in India in terms

of divestiture / GDR of the equity by Govt. of India. Govt. of India has
disinvested approximately 275.63 million shares (including 70 million
shares through GDR) upto 31.3.2001. MTNL’s outstanding shares as on
31.3.2001 were 630 million (including 30 million shares GDR) out of which
Govt. of India owned 354.37 million shares (56.25% approximately). The
MTNL’s share has been listed at the Stock Exchanges of Mumbai, Delhi,
Chennai , Calcutta & National Stock Exchange.

MTNL was listed at the New York Stock Exchange on 6.11.2001, one
more connection that brings more transparency in its operation .

The company’s equities are considered as an excellent buy globally by

Foreign Institutional Investors, All-India Financial Institutions, Research
Analysts, Merchant Bankers etc.

Capital Expenditure

The capital expenditure during 2002-03 was Rs 10.33 billion as against

Rs.8.22 billion in 2001-02 and the capital expenditure for both the years was
fully met by internal resources. Assets have risen from Rs.9.79 billion in the
year 1986-87 to Rs. 53.11 billion approximately

SOCIO-CULTURAL
• OBJECTIVE OF MTNL

1. To sustain the existing customer base and services.

2. To provide latest technology and services to the customers.
3. To achieve the highest level of customer satisfaction and delight
4. To fund R&D projects which will help MTNL in introducing
technology, understanding customer needs, trying out and
indigenizing new technologies.
5. To diversify in other areas for providing telecom services at national
and international levels.
 6. To provide convergence of Telecom, Information Technology and
related services.
7. To improve productivity by training and redeployment of man-power.
8. To work for social benefits.

• MILLENNIUM TELECOM LIMITED FOR COUSTMER CARE

Incorporated on 17th Feb., 2000, Millennium Telecom Limited is a wholly

owned subsidiary of MTNL that has been formed to do practically any type
of Telecom Business with a focus on value added services. It intends to be a
Universal Telecom solution provider to meet the needs of the customers,
both Telecom and its Applications, on a one stop basis through Service
Level Agreements using Multi Service, Flexible, customized access
supported by a strong billing system. It intends to roll out a router-based
packetised telecom network and create facilities like Application
Development Centre, Internet Data Centre, STP facilities and payment
gateway. Presently, it has a category ‘A’ ISP licence and is in the process of
application development and rolling out the services.

TECHNOLOGICAL FACTORS
• INFORMATION TECHONOLOGY IN MTNL

IT support is essential to implement effective business strategies. A business

has to coordinate on entire supply chain process and corresponding
information flow. MTNL being a service organisation is reaching out to its
customers with a customer-focused strategy for better information about
customer profiles.

The whole world is witnessing convergence of technologies evolved by

Information Technology. Voice & Data services are being offered on single
platform. Services like call centres, internet, e-commerce, intelligent
network, personalized services, network management etc. are required as
single window solution.
MTNL has recognised that IT is the key to future business success. IT has
been implemented as the backbone for running customer friendly services.
Several IT systems such as CSMS (Customer Services Management
System), FRS (Fault Repair Service), DQ (Directory Enquiry), FMS
(Financial Management System), IVRS (Interactive Voice Response
System) and accounting and billing systems are already operational at
MTNL.

MTNL is also in the process of setting up Certification Authority in the

current year.

The projects for Data warehousing, call centers, m-commerce,

e-commerce, billing mediation, telecom software development, new IT
policy and consultancy projects are in the pipeline.