INDIA BUSINESS WORLD - MAY - JUNE 2007
The Month that was ...

MTNL TO SET UP IT PARK IN NOIDA

State owned MTNL, which offers telecom services in Mumbai and Delhi is diversifying its businesses to venture into developing IT parks. The company, which has prime property in both metros will build IT parks and lease this infrastructure to software, BPO and KPO companies. MTNL has also dropped plans to hive off its land bank into a separate company.

Its first project, which is slated to kick off soon, will see the PSU build a 80,000 sq ft IT park in its land in Noida - Core Knowledge Park (CKP). The company has also informed the Bombay Stock Exchange that the Board of Directors has approved the development of its Noida property. "This will be developed by a consortium selected by the company against an open Expression of Interest (EOI) floated by the company," the PSU said in its filing with the BSE.

MTNL sources said that the company expected returns from the CKP in terms of rentals from December 2008, while adding that the developers for the project have already been short-listed. While industry sources said that MTNL had awarded the contract to develop the CKP to two consortiums Shanghai Urban Construction Group and IDEB.

Interestingly, MTNL's CKP project is coming up at Noida's sector 62, where other developers such as DLF and Unitech are also building IT parks.

MTNL is likely to adopt a model, where the developers of the project will not got a stake, but will instead be provided with a revenue sharing arrangement. This implies, both MTNL and the developers will share the rentals on the property - the company is currently working out the time frame and the ratio of revenue sharing, sources said.

At the same time, MTNL is also in the process of identifying developers for developing its land banks in both Delhi and Mumbai. In its next project, it is likely to develop its 1 lakh sq ft plus property in Mumbai, sources added. MTNL has been looking at extending its business overseas in addition to venturing into new avenues at home as it has been under intense pressure from the ever increasing competition in Delhi and Mumbai markets. Additionally, the company's revenue streams from telecom services are limited as these metro markets are facing saturation and is also witnessing a fall in landline connections.