State-run MTNL is working on a plan to operate its mobile services business in Delhi and Mumbai in partnership with BSNL on a revenue sharing basis.

“We are having a very low market share in mobile services and not in a position to make capital investment. We are in discussions with BSNL that can invest in infrastructure and run our mobile business on a revenue share basis,” MTNL CMD N K Yadav told PTI in an interview.

As per latest Trai report, MTNL had 36.23 lakh mobile customers at the end of January 2016, accounting for 0.36 percent of total market share.

He said the company has not been able to place the mobile network expansion order for which NokiaNetworks was selected due to financial as well technical challenges.

Yadav further said it will have to depend on debt for expanding mobile network and the interest that it will pay on procurement will not be in sync with the income it will generate from the mobile business.

“BSNL has high negotiating power as their scale of operation is much larger compared to MTNL. A high level committee at DoT is evaluating the way we can work in sync with other. We are seeing if BSNL can operate MTNL mobile network on a revenue share basis,” Yadav said.

When contacted, BSNL Chairman and Managing Director Anupam Shrivastava said BSNL is ready to invest and work with MTNL and discussions in this context are going on.

Yadav said the spectrum payment of about Rs. 11,000 crores by MTNL in 2010 disturbed its balance sheet.

“Besides principle, it (spectrum payment) increased interest on debt raised by MTNL. We have huge interest which we have been trying to lower by cutting cost and focusing on area where we are strong like fixed line broadband,” Yadav said.

As per Trai report, MTNL is the third largest player with 13.79 percent market share in fixed-line connections.

MTNL is focusing on converting its landline only users to broadband users, which it expects will increase average revenue per user (ARPU), he said.

“Out of about 35 lakh landline customers we have, only 12 lakh are using broadband. We get ARPU of Rs. 200 from voice calls and ARPU of Rs. 500 from broadband. We are targeting to convert 60 percent of only telephone service users to come on broadband by December,” Yadav added.