The union cabinet approved a proposal to separate Bharat Sanchar Nigam Ltd’s (BSNL) mobile tower assets into a new unit, a move that will potentially generate revenues and improve finances of the state-run telecom firm.
This approval authorizes BSNL to monetize its telecom tower infrastructure, the government notified in a statement on Tuesday.
BSNL owns more than 66,000 mobile towers in India, almost 15 percent of the around 442,000 mobile towers in the country.Telecom minister Manoj Sinha said that the move emulated the actions of private telecom firms.
“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 to an English daily. Sinha added that the process will be completed in two years.
The mobile 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.
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 percent economic interest in Indus Towers Ltd, India’s largest tower company.
BSNL has debt of Rs3,200 crore and revenue of Rs30,000 crore, the least in the industry.
By Baishakhi Dutta