BSNL’S plan to spin off mo­bile tower busi­ness gets govt nod

Union cabi­net’s ap­proval au­tho­rizes the tele­com firm to mon­e­tise its tele­com tower in­fra­struc­ture, says gov­ern­ment

Mint Asia ST - - Inside - BAY MRIT R AJ

The Union 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 au­tho­rizes BSNL to mon­e­tize its tele­com tower in­fra­struc­ture,” the gov­ern­ment said in a note on Tues­day, 12 Septem­ber.

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,” Sinha said.

Anu­pam Shri­vas­tava, chair­man and man­ag­ing di­rec­tor 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 to re­duce cap­i­tal in­vest­ment costs for pro­vid­ing 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 li­cence fee per­spec­tive, you are also able to re­duce your li­a­bil­i­ties,” said Ma­hesh Up­pal, di­rec­tor of tele­com con­sult­ing firm Com­first.

A tower in­fra­struc­ture com­pany es­sen­tially leases it to tele­com ser­vice providers, en­abling them to min­i­mize du­pli­ca­tion of in­vest­ments and econ­o­mize 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.

Air­tel in March sold a 10.3% stake in In­fratel to raise Rs6,200 crore and later in Au­gust, it sold an ad­di­tional 3.65% stake to gen­er­ate Rs2,570 crore. The money raised was used to pare debt and com­bat com­pe­ti­tion from Mukesh Am­bani-pro­moted Re­liance Jio In­fo­comm Ltd.

Jio’s rise has sparked con­sol­i­da­tion in the In­dian mar­ket and ex­perts say that only four com­pa­nies, in­clud­ing BSNL, are likely to sur­vive in the long term. 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 Rs3,200 crore and rev­enue of Rs30,000 crore, the least in the in­dus­try.

Mayank Ag­gar­wal and Nikita Do­val con­trib­uted to this story.

Busi­ness po­ten­tial: The tele­com tower in­dus­try has emerged as an in­de­pen­dent busi­ness to har­ness the po­ten­tial for shar­ing of in­fra­struc­ture.

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