Cabinet okays BSNL’s proposal to spin off mobile tower business
The Cabinet approved a proposal to separate Bharat Sanchar Nigam Ltd’s (BSNL’s) mobile tower assets into a new unit, a move that will potentially generate revenues and improve finances of the state-run telco.
“This approval authorises BSNL to monetise its telecom tower infrastructure,” the government said in a statement on Tuesday.
BSNL owns more than 66,000 mobile towers in India, almost 15% of the around 442,000 mobile towers in the country.
“An independent, dedicated tower company of BSNL with a focused approach will lead to increasing of external tenancies (or number of companies using a tower) and consequentially higher revenue for the new company,” the government said.
Telecom minister Manoj Sinha said that the move emulated the actions of private telcos.
“Telecom tower industry is becoming a big business. Private telecom service operators have been doing this through separate tower companies. Today cabinet has given a right to BSNL to make a similar kind of separate tower company,” Sinha said.
Sinha added that the process will be completed in two years. “We have a tenancy ratio of 1.14% while the others have 1.9%. With this the tenancy ratio will increase for us. More than 1,600 BSNL employees are expected to go on deputation for this.”
Anupam Shrivastava, chairman and MD of BSNL did not respond to phone calls or text messages seeking comments.
The telecom tower industry has emerged as an independent business to harness the potential for sharing of infrastructure. The business model arose from the need to achieve economies of scale and reduce capital investment costs for mobile services.
“Having the towers hived off creates greater flexibility in terms of renting space on them to a large number of other players. Plus, from a license fee perspective, you are also able to reduce your liabilities,” said Mahesh Uppal, director of telecom consulting firm Comfirst.
A tower infrastructure firm essentially leases it to telecom service providers enabling them to minimise duplication of investments and economise on costs of operation and maintenance, thereby improving profitability.
Bharti Infratel Ltd, a unit of India’s largest telecom services provider Bharti Airtel Ltd, is responsible for building the telecom towers. It is the largest of the operator-owned tower companies in India with a 42% economic interest in Indus Towers Ltd, India’s largest tower company.
Bharti Airtel in March sold a 10.3% stake in Infratel to raise ₹6,200 crore and later in August, it sold an additional 3.65% stake to generate ₹2,570 crore. The money raised was used to pare debt and combat competition from Reliance Jio Infocomm Ltd.
Jio’s rise has sparked consolidation in the Indian market and experts say that only four firms are likely to survive in the longterm, including BSNL. Amid the changing industry scenario, the state-run telco’s role is extremely important to maintain a balance in the market and cater to the governmental’s needs to promote the Digital India campaign.
BSNL has debt of ₹3,200 crore and revenue of ₹30,000 crore, the least in the industry.
Mayank Aggarwal and Nikita Doval contributed to this story