Mahanagar Telephone Nigam [Get Quote] Limited has stopped offering new mobile connections in Mumbai as equipment supplier ITI has failed to expand the capacity, contracts for which were placed over an year ago under the reserve quota for public sector firms.

MTNL has about 15 lakh mobile subscribers in Mumbai but has no more connections to offer and has stopped advertising for its cellular services Dolphin, highly-placed sources said. All investment plans to increase base stations have been put on hold, they added.

The public sector unit is likely to hold its board meeting in the first week of September to take an urgent action in this regard. ITI, who has a technical tie-up with French vendor Alcatel, was given the order to add capacity more than a year ago under the reserve quota started by former Telecom Minister Dayanidhi Maran.

MTNL had opposed Maran's move of offering 30 per cent contract order to a PSU on the ground that MTNL has only two circles -- Delhi and Mumbai -- and it was not feasible to implement the reserve quota system as in case of another PSU Bharat Sanchar Nigam Ltd.

Maran, however, had refused to accept MTNL's plea, an official said, adding "we are paying a price of being a PSU as it never happens in the private sector".

Several reminders have been given to ITI but this has been of no use. After Mumbai, US equipment supplier Motorola was given the contract for Delhi in October 2006, and the company has already laid the capacity.