Business Today

Bleeding BSNL banks on stake sale in tower business

The turnaround plan of lossmaking Bharat Sanchar Nigam Ltd (BSNL) through partial stake sale of its nationwide tower business and leasing out its CDMA network seems to be headed for failure.

Sanjay Singh        Last Updated: December 25, 2012  | 14:08 IST

The grand turnaround plan of lossmaking public sector company Bharat Sanchar Nigam Ltd (BSNL) through partial stake sale of its nationwide tower business and leasing out its CDMA network seems to be headed for failure.

Senior government officials told MAIL TODAY that consolidation and uncertainty in the telecom sector has seen tower valuations dropping by over 70 per cent in the past three years and the price has fallen to rock bottom.

"Most telecom companies that rent these towers have exited the sector as a result of which there is little or no demand," a senior official said.

BSNL has already hired consultants to help it hive off its tower business . The consultants are expected to complete work by April 2013. BSNL has around 70,000 towers across the country and the consultants will explore various business models that can realise value for the infrastructure.

EXPLORING NEW OPTIONS

  • Consolidation and uncertainty in the telecom sector has seen tower valuations dropping by over 70 per cent in the past three years and the price has fallen to rock bottom
  • BSNL has around 70,000 towers across the country and its consultants will explore various business models that can realise value for the infrastructure
  • Reliance Infratel Ltd (RITL), a subsidiary of Reliance Communications (RCom), and Bharti Infratel have also been looking to sell their towers but have met with little success
  • The Telecom Commission recently approved a subsidy of Rs 1,500 crore for supporting landline operations of BSNL in rural areas
The plan to hive off the tower business is in line with recommendation of the Sam Pitroda Committee for revamping BSNL.

BSNL in its performance review with telecom minister Kapil Sibal on November 16 had claimed that it would be able to bring in Rs 1,600 crore over the next five years by selling a stake in its tower business, leasing out its CDMA network and rolling out Wi-Fi networks across the country.

BSNL told Sibal that it would be able to rake in Rs 500 crore in the first year under its plan and the amount would double from the second year onwards.

According to industry experts, CDMA operations have taken a backseat as they have lost out to GSM players. The market for CDMA operators has now come down to less than 15 per cent.

"No telecom company took part in the recent auction of 800 MHz CDMA band of 2G spectrum," an industry analyst pointed out.

BSNL has tower sharing pacts with many private telecom operators and has a huge land and network assets, one of the largest in the country. BSNL, which once had monopoly in domestic telephony, has been deteriorating in financial performance.

In association with Mail Today

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