MTNL – Messed Twisted Noxious Land

Imagine that you are gifted a juicy monopoly business of running the telephone lines of India’s major cities – Mumbai and Delhi.  Also, with it is the guarantee that there is no one in the Country that will be allowed compete with you, and fact that the cities of Mumbai and Delhi you have inherited are the most important and undoubtedly the most wealthy cities of India.

 

The business you inherit has a net Profit of 939 Crores ( approx 250 milllion US$).

 

Any entrepreneur worth her pepper (salt is too precious) would swoon and probably leave everything for an opportunity like this. 

 

But only the management of MTNL (yeah the Government, who else) can take this business, and really apply some amazing management magic  to it …..so as to to run the business completely into the ground in just 5 years and also generate a loss of 2600 crores in the last year!!! (thats half a Billion Dollars lost in one year alone)!

 

This is an unbelievable feat and definitely deserves a humble submission to the Guinness Book of ‘World Losses’ for a debut entry!

 

So, what happened and happens at MTNL? How do you manage to pull of something so incredibly dumb?

 

The financial mess of MTNL is not some hot investigative revelation your faithful Rodinhood is reporting – everyone knows that the business has been sinking over the past 5 years and they are now playing the ‘Aaapun Raanget Aaha’ sound track on their sinking Titanic.

 

What I am attempting to analyse here is ‘why’?

 

The financial pundits have spoken about the usual causes:

 

– Landline signup’s have plummeted and hence the basic business of the Company has been completely smashed

 

– MTNL is a govt. organisation and could not compete swiftly with Mobile Operators with similar services

 

– Some MTNL management have also talked about ‘government red tapism’ in getting equipment clearances etc.

 

I believe this is one big bag of cow dung (coz we have lots of cows in India).

 

The real reasons why MTNL is looking like cow who has been eaten up by Piranhas are as follows:

 

Their ‘Go to Hell’ attitude to begin with:

 

In my home at Peddar Road, I have an MTNL connection. Unfortunately, South Mumbai is monopolized by MTNL (since they laid the telephone wires many years back), and they are the only Broadband Service available. Even in this age and time, they have no competitors!

 

Now, let me share my experiences of dealing with them:

 

– Every Saturday morning thru Sunday evening, their service goes down and behaves very erratically  – the reasons of which are still not understood by me. 

 

– When you try calling 1504 – the complaint line, its a disaster. There is a long sequence of choosing languages etc and finally when the line goes to the Operator, it abruptly cuts off. On an average it takes 4 attempts to connect to a live Operator who says ‘Bola’.

 

– When you do manage to converse in English to those Operator Women (who sound like fisherwomen in a market gossiping), they are simply amazing in their responses:

 

‘Yes Sir, the service is little little bad’ ( little bad…err…explain how do i relate to ‘little bad’ for broadband… what is not so bad or what could be little good? I mean I thought either the service works or it doesn’t!)?

 

‘U get all green lights on ‘Maudem’ (Modem)? No? then change DNS address’ (they ask me to change DNS addresses (hard type in) even more frequent than we change tissues used when we have a bad cold!

 

‘Server department is down’ ( bloody hell, how can servers be in a department (store?) and how can that be down’)?

 

‘You called operator. Call compliant number’

 

etc etc

 

I usually scream at them and tell them to look up. When they say ‘huh’?, I tell them that the fan above them is running using my tax payers moneys and that they will be soon shut down in a couple of years.

 

All this is fine but, they dont give a damm.

 

I dont think the Operators have ever used PC’s, Internet or any connected device to understand what the consumer is complaining against…. (yesterday I told the fisherwoman that I cant connect my iPad with my wifi and she kept saying ‘go to start menu on bottom of machine and go left and press click’!!

 

(Imagine telling Steve Jobs that in India, the biggest broadband operator expects to see a Windows interface in Apple devices)!!

 

Also, I have nothing against fisherwomen. In fact any Mumbaikar respects them. I just think they do a great job selling fish in a crowded market than operating live Broadband Help lines.

 

Simply speaking, the MTNL disaster is all about what I would like to term lack of complete ‘Consumer Consciousness’. They dont want to come close to their customer or figure out what’s on their minds.

 

 

 

Another reason is just Laziness.

 

I think all MTNL employees can win the worlds best awards for sitting non stop on their chairs and recording the largest number of ‘arse hours’.

 

MTNL did nada to create a demand and buzz for their offerings beyond the land line phones.

 

Consider this rather shocking chart (all data taken from the mtnl.in website)

 

	2004-05	2008-09	2009-10	2009-10	2010-11
	FY	FY	Q2	FY	Q2
Basic Wireline	4,015,173	3,573,206	3,514,454	3,496,754	3,474,542
– Delhi	1,704,871	1,525,981	1,535,106	1,537,460	1,546,202
– Mumbai	2,310,302	2,047,225	1,979,348	1,959,294	1,928,340
Internet connections
– Broadband	8,261	695,500	735,744	815,830	890,640

 

If you note, despite having 3.5 million wireline users in Mumbai and Delhi, their Broadband connectivity is only 900k consumers ( or not even 30% of the installed wireline base).

 

Today, in cities like Mumbai and Delhi, even shop keepers need Internet connections for basic requirements such as checking on price updates etc. They would have been sitting duck consumers for MTNL (who anyway power their telephone lines).

 

Did MTNL ever go out to its Wireline clients and thrown in Free Broadband for Trials??

 

(ps – the big big advantage with MTNL is that their Broadband is delivered using the same copper wire that is installed in 3.5 million homes, so they have no cost of laying cables etc)!!

 

I have never ever got an offer from MTNL.

 

Long story short, everyone who could get broadband via MTNL easily gave up waiting and going thru bribery infested waiting lines and simply bought those Internet ‘Sticks’ that can be inserted into laptops ( I am using one just now coz on Sunday as I indicated before, MTNL is takes a break)!

 

Another reason for this colossal failure is that MTNL loves climbing down the value chain..

 

MTNL failed miserably at capitalizing the entire business opportunity of Mobility.

 

Check out this chart of their Average Revenue Per User (ARPU’s):

 

	2004-05	2008-09	2009-10	2009-10	2010-11
	FY	FY	Q2	FY	Q2
Basic Telephony
– Delhi	722	510	510	491	480
– Mumbai	899	635	622	614	578
– MTNL	819	581	573	561	535

 

 

As the numbers show above, their ARPU’s crashed from 819 in 2004-5 to just 535 in 2010-11

 

If the number of business customers start declining & the amount these declining customers spend on you also begins to go into a tailspin, normally, the owners of businesses stop sleeping at night and run helter skelter to fix things:

 

Ideas:

 

– Offer free mobile connections to existing users so that I use MTNL first rather that Airtel..

– Combine free Broadband and Mobile if I lock into a certain Landline billing contract

etc etc

 

Nothing of the sort ever happened.

 

Let me summarize by saying that MTNL was a Gold Mine; they had the best telecom consumers of India on their side (with whom they had a 20+ year billing relationships and trust)….but they blew it all up to create what now look like a Nuclear Plant gone bad and that needs to be buried in the ground.

 

My predictions:

 

– In the next 3 years MTNL will completely destroy its capital and reserves and become a public beggar like Air India.

– Wifi players and specially WIMAX players will kill any chance of Broadband growth of the MTNL business.

– The fisherwomen and their unions will stay employed and keep harrassing the Indian government for charity cheques towards their salaries.

 

I am forwarding this post to AS MANY MTNL e-mail id’s as I can (and so should you), but I can assure you that MTNL will react in the way its most famous for:

 

BY DOING NOTHING!!

******

 

Financial data excerpts also below (from the mtnl.in website):

 

Internet connections
– Broadband	8,261	695,500	735,744	815,830	890,640
– Post paid connections	975,030	1,407,346	1,464,694	1,472,722	1,476,418
– Pre paid connections	29,210	21,280	21,297	21,099	2,091
Total	1,012,501	2,124,126	2,221,735	2,309,651	2,369,149
	2004-05	2008-09	2009-10	2009-10	2010-11
	FY	FY	Q2	FY	Q2
Basic Telephone	(Audited)	(Audited)	(Unaudited)	(Audited)	(Reviwed)
(a) Rentals	11,941	10,383	2,358	9,462	2,069
(b) Call Charges & Other Revenue	32,192	16,229	3,124	11,142	2,639
(c) Interconnection	7,286	3,304	583	2,113	401
Sub-Total	51,419	29,916	6,065	22,718	5,109
Cellular	2,737	8,261	1,749	6,951	1,617
WLL	1,043	537	109	372	58
Other Services	621	5,846	1,632	6,520	3,752
Income from Services	55,820	44,560	9,554	36,561	5,427
Other Income (including interest)	4,917	7,943	1,608	14,017	416
Total Income	60,737	52,502	11,161	50,578	10,952
Staff Cost*	18,361	21,274	4,601	49,663	7,833
Revenue Sharing (Interconnect Cost)	8,782	7,526	1,398	5,257	1,108
Licence Fee	4,972	4,286	1,087	3,837	896
Admn/Op. Expenditure	10,228	9,779	1,998	8,403	2,295
Depreciation	5,880	6,988	1,766	17,595	3,429
Interest	358	12	1	13	1,439
Total Expenditure	48,581	49,865	10,851	84,766	17,000
Profit before tax	12,156	2,638	310	-34,188	-6,048
Provision for Taxation	2,567	4,330	264	2	0
Provision for Deffered tax	106	-1,312	-160	-3,553	0
Net Profit	9,483	-380	206	-30,638	-6,048
Prior Period Adj.	94	-2,497	0	-4,528	1
Net Profit after Adj.	9,389	2,117	206	-26,110	-6,049