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BSNL plans infrastructure leasing; freezes IPO plan after Rs1,200-crore windfall news
25 April 2008

Mumbai: State-owned Bharat Sanchar Nigam Ltd is planning to hive off its telecom infrastructure into a separate company. BSNL, which will get about Rs1,200 crore annual benefit from the newly-announced exemption of licence fee on fixed line telephony, also scrapped plans for an initial public offer (IPO).

BSNL gets annual revenues of about Rs15,000 crore from its fixed line operations and the PSU pays on an average 8-9 per cent of Adjusted Gross Revenue (AGR) as licence fee to the government.

BSNL has 32,000 base stations for GSM-based mobile services and another 7,000 for its CDMA services. The company has changed its earlier stance and now wants to lease the infrastructure to private operators, mainly to new licensees who are looking for a quick roll-out.

Private telecom majors like Bharti Airtel, Idea Cellular and Vodafone Essar are reaching out to new areas riding each other's infrastructure. Some operators have hired up to 60 per cent of their passive infrastructure requirements to drive down costs.

BSNL has the largest network and one of the widest network coverages in the country. Hiving off the infrastructure into a separate business could bring rich dividends to the public sector telecom operator.

BSNL's financial viability had taken a hit after the government removed subsidy in terms of Access Deficit Charge, a levy paid by private players to BSNL for carrying out rural operations. BSNL was getting ADC to the tune of Rs5,000 crore annually till about two years ago from private players but now it has been completely waived with effect from April this year.

BSNL also fulfills various social obligations of the government and has to operate in loss-making rural areas. 

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BSNL plans infrastructure leasing; freezes IPO plan after Rs1,200-crore windfall