BSNL gets government nod to hive off mobile tower business

The government has approved a plan to hive off the telecom tower business of state-owned Bharat Sanchar Nigam Ltd (BSNL) into a new company, which will help the state-run firm to improve its financial position by unlocking the value of its mobile towers.

The cabinet also decided to provide compensation of Rs627.20 crore to BSNL and MTNL for 800 MHz CDMA spectrum that they surrendered.

BSNL will get a major share of Rs458.04 crore while MTNL will get Rs169.16 crore on surrender of 800 MHz CDMA carriers in few of their circles, source said.

BSNL has surrendered spectrum (one carrier of 1.25 MHz each) for 4 circles and MTNL in Delhi and Mumbai (two carriers of 1.25 MHz each).

The surrender of spectrum by BSNL and MTNL has enhanced contiguity of spectrum in some licensed service areas thereby enabling higher prices obtained in auction. The auctioning off this spectrum for 20 years has yielded a revenue of Rs3,997.61 crore to the government.

With assets of about 64,500 towers and more than 50,000 of these tower sites having optical fibre cable connectivity, BSNL expects its mobile tower company to have a valuation of about Rs20,000 crore.

The Department of Telecom is expected to constitute an inter-ministerial group for working out the capital and organisational structure of the new company after market valuation of its tower assets.

The union cabinet will consider the modalities of hiving off the business, sources said.

BSNL has been sharing its tower business with other operators from 2010 fiscal onwards, but it is yet to realise full potential of its market share. BSNL has tower sharing agreements with most private players.

As its towers are spread across the country, even in the remote areas, private telcos prefer to share BSNL's infrastructure.

BSNL also plans to monetise its other passive infrastructure like factory, land assets and training centres. The monetisation of other related passive infra assets could help BSNL raise another Rs10,000-15,000 crore, according to estimates.

So far it has leased around 5,471 towers to various private telecom companies earning a revenue of Rs432.6 crore at the end of May this year.