GoM to consider proposal hive off tower assets of BSNL into a seperate company

The Department of Telecommunications (DoT) has sought approval from the Group of Ministers (GoM) on the proposal to hive off tower assets of state-run telecom operator Bharat Sanchar Nigam Limited (BSNL) into a separate company. The proposal is part of the Government’s plan to revive the troubled public-sector telecom giant.

 

Earlier, consulting firm KPMG was appointed to chalk out a plan for the possible hive off. 

 

BSNL currently has 61,622 towers across the country, the second largest after Indus Towers that has 1.1 lakh towers. Of its total towers, the Government has funded about 5700 towers from the Universal Service Obligation Fund (USOF) and are located in the rural areas to offer services in the un-served and under-served locations. About 25,000 towers are co-located with wireline exchanges and the remaining about 30,500 towers are located in towns and other business areas. BSNL started sharing towers with private operators in fiscal year 2010 and has shared only 2,200 towers. On the other hand, it has leased tenancies at about 11,000 locations from other tower companies to meet cobverage requirements and business expansion needs.

 

The plan now is to hive off the assets into a separate company, and it may look at leasing or selling its tower assets to a third party, while operations and management would be outsourced, according to a recent discussion.

 

Meanwhile, the GoM has been considered different options to chalk out a strategy of revival for BSNL and Mahanagar Telephone Nigam Ltd (MTNL), including a possible refund of the broadband wireless access (BWA) fee to the state-owned telecom operators after they surrender the spectrum. However, the modalities are yet to be finalised.

 

The two companies had asked for a refund of the entire amount paid. BSNL had paid Rs 6,725 crore and MTNL Rs 4,534 crore. Both had together accumulated a loss of Rs 39,314 crore (BSNL Rs 24,681 crore and MTNL Rs 14,633 crore) at the end of March 2013. 

 

The GoM had also proposed to revive BSNL and MTNL by waiving the one-time fee the two telcos needed to pay for retaining additional spectrum beyond 4.4MHz in GSM and 2.5 MHz in CDMA band. This would give a burden of Rs 12,000 crore to the exchequer.