Govt ‘quotas’ for ITI disrupt MTNL capacity addition plans

When ITI was not able to deliver in two years, MTNL cancelled the orders for broadband. However, MTNL has suffered huge reverses in terms of loss of potential subscriber base. MTNL has a waiting list of 33,000 for broadband connections in Mumbai. In 2006, DoT had forced MTNL to give an order of 500,000 broadband connections. Till now, ITI has supplied only 40,000 connections. Consequently, MTNL cancelled the order.

Similarly, for GSM, MTNL gave ITI an order of 1.25 million lines in 2006. The project was to be commissioned by December 2006. Even now, the project is not complete. ITI has commissioned only a fourth of the quantity till now. Moreover, most of it is through swapping with the existing network. This means that no new capacity was added.

“ITI could not complete any of the projects,” said MTNL chairman and managing director R S P Sinha. “Therefore, in order to protect MTNL’s interests we have gone for other alternatives. “I do not agree with this,” said ITImanaging director S K Chatterjee. “We have supplied a part of the broadband order and are proceeding with the GSM order.” But according to Sinha, on the GSM project, ITI is working only on the non-core areas on the outskirts of Mumbai.

In November 2006, Sonia Gandhi inaugurated ITI’s GSM manufacturing unit at Rai Bareli amid much fanfare. ITI has a tie-up with Alcatel for technology transfer; the company (Alcatel-Lucent) announced a fourth quarter loss of Euros 2.58 billion on Friday. It is not yet clear how two loss-making companies would fulfil their commitments to MTNL and Bharat Sanchar Nigam Ltd (BSNL), where again ITI is a major supplier.

DoT has a quota policy for ITI. Under this policy, BSNL and MTNL are forced to give up to 30 per cent of their total orders to ITI. In case of broadband and GSM, ITI has tied up with Alcatel. ITI suffered a loss of about Rs 117 crore for the third quarter of 2007-08.