MTNL to float VC fund for telecom R&D

By agencies   |   Wednesday, 29 June 2005, 07:00 Hrs
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NEW DELHI: Mahanagar Telephone Nigam Ltd is planning to set up a venture capital fund to promote research and development in the area of telecommunications.

The state-owned company is targeting to support research institutions such as the Indian Institute of Technology across the country for the project.

The fund will also be used to finance start-ups and software companies which are involved in the area of application development and enhancement of existing technologies.

Developing application for mobile users is one of the key areas being looked at by most operators across the world. That is because revenues from voice calls are dipping and the operators need to balance it out by introducing newer applications.

For instance, the U.S. based Qualcomm has invested $350 million in small companies, which are developing applications for mobile handsets.

Though the size of the fund being planned by the MTNL is not known, going by the number of software developers in the country working on telecom, the VC kitty is going to be sizeable.

The company, by itself, is doing software development and customization in the areas of m-commerce and e billing.

The move to foray into VC funding is part of MTNL's overall strategy to expand its business operations. The company is also aggressively looking at the international markets to roll out mobile and fixed line services especially in third world countries such as Nepal, Kenya and Mauritius.

That apart, MTNL is tying up with State electronic corporations, which have an Internet Service Provider's license, in order to roll out its Internet services across the country. The expansion is being forced by the fact that MTNL is restricted to the saturated Delhi and Mumbai markets.

The company's profits have been declining over the last couple of years in the face of stiff competition from private operators.

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