MTNL seeks franchisees to market its 3G services

Concerned about the poor response to its third-generation (3G) services, Mahanagar Telephone Nigam Ltd has now invited private players to roll out its services in Delhi and Mumbai on a revenue-sharing basis.

Having decided on the franchise route to sell its 3G services in Delhi and Mumbai, the state-owned telecom service provider has floated a global expression of interest for the 3G services franchise.

Despite having obtained 3G spectrum ahead of private players - who had to wait for the long-delayed spectrum auction - MTNL is reported to have managed to garner just 1,000 subscribers over the past six months.

Though the public sector undertaking has not managed to push the uptake of the new technology, it has set stiff targets for the proposed private partner. The targets include assured revenue of Rs240 crore in each metro over a three-year period. If the franchisee fails to meet the targets, MTNL will charge a penalty, which will be 10 per cent of the shortfall amount.
 
MTNL has also demanded a guarantee of minimum daily revenue of Rs500 a month per user from day one. While the partnership will be on an exclusive basis, MTNL has reserved the right to change or bring in additional franchisees if the private player misses targets after the three-year period.

MTNL will provide the infrastructure, including land and air conditioning on a chargeable basis for co-locating the equipment of the 3G franchisee. While the private player can use MTNL's spectrum, it will have to set up its own infrastructure.

The franchisee is also required to set up its own payment collection system, create a sales and distribution network to promote the MTNL brand, or create their own branding and marketing of 3G services and products.