According to published reports, India’s MTNL has scrapped
its plans to transfer its 3G network to Spice Group and Virgin Mobile. The
units are located in Mumbai and Delhi.
There have been mixed reports in the media concerning the
cancellation of the outsourcing deal with some reports citing political
pressure from the government and others referring to internal problems within
the firm.
Kuldeep Singh, who is the managing director and chairman of
MTNL confirmed that the deal would not go through to the Economic Times. He was
quoted as saying, "We may issue a fresh tender after government approval.
We are still open to the concept of outsourcing our 3G networks,” reports
cellularnews.com
MTNL was seeking to outsource its 3G operations in Delhi and
Mumbai after poor subscriber uptake
following six months of introducing the service. But, after the tender was
announced for an outside partner, the number of subscribers have skyrocketed to
more than 35,000 from just 1,000 prior to that. The 1,000 figure has raised
concerns about MTNL’s marketing and execution strategies.
According to MTNL, its networks would be able to support
100,000 3G customers in Delhi and Mumbai separately over a period of a year
after it inks a deal with a franchisee partner.
“MTNL is in line to meet these targets. So, the new
management decided that contract terms and conditions will have to be revised
upwards steeply. But considering that selected bidders were unlikely to accept
new terms, the telco had no option but cancel the contract,” said one executive
with MTNL, reports Economic Times.
When approached about details of the deal, Virgin Mobile
India’s Madhusudan Mandyam said that Virgin has not received any information regarding
the deal from MTNL. He added, “We understand they have put it in cold storage.
We have written to them saying our Earnest Deposit Money should be returned if
they don’t plan to go ahead with the tender, but have received no response.”
According to 2010 outsourcing
statistics in India, outsourcing deals are expected to pick up along with
mergers and acquisitions. Outsourcing in India
in 2010 continues to dominate the industry as it has in the last ten to
twenty years. Outsourcing activity is speculated to pick even more as a
recovery is in the offing.