The Cabinet on Wednesday gave ‘in-principle’ approval for hiving off state-run Bharat Sanchar Nigam Ltd’s (BSNL) tower assets into a separate company, aiming to generate additional stream of revenues for the loss-making unit.
The department of telecommunications (DoT) has been asked to constitute an inter-ministerial group consisting of representatives from public enterprises, department of pension and pensioners’ welfare and department of economic affairs for working out the capital structure and organisational structure of the new company, sources said.
BSNL has been planning to monetise its huge tower assets — 65,000 towers, since the last couple of years. This is part of the revival plan for turning BSNL back into profits. The monetisation of other related passive infra assets could help the PSU raise about Rs 10,000-15,000 crore.
BSNL generated revenues of around Rs 200 crore from the tower business, which is expected to go up to Rs 2,000 crore once the new separate unit is carved out. “We plan to monetise our passive infrastructure — towers, factory, land assets and training centres - for generating additional income,” according to a senior BSNL official.
The new tower unit is expected to have a valuation of Rs 8,000-10,000 crore. BSNL will have 100 per cent stake in the tower unit, which will be maintained at arm’s length. The BSNL board had approved the hiving off earlier.
BSNL will outsource operations and maintenance as well as sales and marketing functions. The new tower unit is expected to have a lean management and operational structure.
BSNL has already leased out 4,500 towers to Reliance Jio and about 1,500 to Bharti Airtel. As the towers of BSNL are spread across the country, even in the remote areas, private telcos prefer to share BSNL’s infrastructure rather than investing in setting up of their own network. Indus Towers, a joint venture (JV) between Bharti Airtel, Vodafone and Idea Cellular, is the largest player in the tower industry.
An increasing competition and constraints in its capacity expansion plan led BSNL post a loss of Rs 1,823 crore in 2009-10 for the first time since inception in 2000. The losses have now reached to the tune of Rs 7,600 crore.
To revive the company in the next 2-3 years, the new chairman and managing director of BSNL Anupam Shrivastava plans to invest Rs 39,000 crore over the next five years to expand BSNL’s core network. BSNL is also focusing big time on launching data services - WiFi and 4G with a plan to integrate WiFi with their mobile network to provide users a seamless experience of 3G and WiFi services.
<b>Rs 628 crore to BSNL, MTNL cleared</b>
In another decision, Cabinet approved to give financial assistance of about Rs 628 crore to BSNL and MTNL, in lieu of surrendering 800 MHz spectrum in some circles. BSNL will be given a support of Rs 169.16 crore, while MTNL will be given assistance of Rs 458.04 crore.
There has been a gain for the government as the sale of this spectrum for 20 years has yielded revenues of Rs 3,997.61 crore. The surrender of spectrum by BSNL and MTNL enhanced contiguity of spectrum in some licenced service areas enabling higher prices obtained in the auction, according to sources.
Arbitration Act: The Cabinet cleared a proposal to amend the Arbitration Act, which sets a fixed timeline for arbitrators to resolve cases. Under the amendments to the Arbitration and Conciliation Act, 1996 cleared by the Union Cabinet, an arbitrator will have to settle the case within 18 months. But after the completion of 12 months, certain restrictions have been put in place to ensure that the arbitration case does not linger on, sources said.
High court judges: The Cabinet removed anomalies in pensionary benefits of high court judges elevated from the bar, thereby implementing an order of the Supreme Court. For pensionary benefits, 10 years practice as advocate will be added as qualifying service for high court judges elevated from the bar, as ordered by the Supreme Court in a judgement in March last year.