Swan Telecom seeks BSNL tie-up for infra

If the deal works out, it will be the first time that any incumbent operator, let alone a state-owned company, will form such a comprehensive alliance with a competitor in mobile telephony.

The proposal involves Swan, which is owned by a clutch of investors who bought the company from the Reliance Anil Dhirubhai Ambani Group, using BSNL's towers and networks (including electronics, leased lines and fibre backbone) at a mutually agreed revenue model.

Swan's detailed proposal has suggested that it will provide a plan of its requirement for a network roll-out to BSNL as a preferred vendor and will look at alternatives only if BSNL is unable to meet these.

The strategic alliance would also include using BSNL's leased lines and its fibre optic backbone in cities, routing national long-distance traffic through the state-owned operator's network, intra- and inter-circle roaming arrangements, and cooperation in planning infrastructure expansion.

The proposal takes advantage of the current policy that allows only "passive" infrastructure (such as towers) and "active" infrastructure (electronics on the tower as fibre backbone, among others) to be shared.

The government rules do not, however, permit sharing spectrum but Swan has already been allocated radio frequencies that enable wireless communications for some circles.

If signed, it will also be a model by which a new operator can roll out services quickly and at a lower cost without having to put the entire infrastructure on its own.

Confirming the proposal a Swan Telecom executive said: "We are exploring all options to expand network and services in the country", adding that the company was in talks with public and private companies.

BSNL declined to comment on the proposal. However, Department of Telecommunications (DoT) officials said the company has received offers from the operators and will take a call soon.

Experts say a pan-Indian roll-out could cost a new operator $4-5 billion but a comprehensive infrastructure-sharing alliance with an incumbent operator could reduce the cost by half.

Others, however, point out that such a deal might not be practical given the high level of competition between the telcos.