BSNL plan to hive off its tower business into a separate company has gained momentum with the Department of Telecom (DoT) moving a Cabinet note seeking permission.
The number of towers of BSNL is 61,622. For comparison, Indus Towers, a joint venture between Bharti Airtel, Vodafone India and Idea Cellular, has 1.2 lakh towers.
Quoting a DoT note, Hindu Business Line reported that setting up of a separate company for holding and managing the tower infrastructure assets of BSNL will enable the new company to unlock the true potential of the tower business and leverage it for expansion and spread of infrastructure.
The DoT note said if the tower assets were considered as a separate entity it would have earned Rs 964 crore in 2012-13. The EBITDA of the proposed tower company is expected to touch Rs 2,357 crore by 2023.
BSNL is too late to take its telecom tower business seriously. Rivals such as Bharti Infratel, Reliance Communications, etc. have already unlocked value of their tower assets.
The DoT note says the total asset base of the proposed company is estimated at Rs 7,226 crore with fixed assets of Rs 6,517 crore and net working capital of Rs 708 crore.
Since the transfer of assets to the new company would be liable to levy of Rs 475 crore worth of stamp duty, DoT proposed to seek a waiver from the Delhi Government. The new tower company is expected to have a workforce of around 3,000 people.
The loss making BSNL has only one percent of the market for tower tenancies.
Telecom department says there are several reasons for the low market share, which include lack of focussed marketing mechanism for customer acquisition, the perception that BSNL towers have a lower site uptime, pricing of infrastructure being more expensive than prevailing market rate, the perception of conflict of interest between BSNL and non-BSNL tenancies and perception of poor response to tenant complaints.
The DoT has proposed to hive off the assets in phases. Under the proposed plan, the tower assets will be moved into an independent business unit within BSNL and operational activities, such as marketing, would be outsourced to private partners. In the second phase, the unit will be converted into a wholly-owned subsidiary.
The entire process is expected to be completed in 12-18 months after the Union Cabinet approves the proposal.
