New Delhi: India’s biggest phone firm by revenues, the state-owned Bharat Sanchar Nigam Ltd, or BSNL, is looking to appoint a consultant to help it form a separate company that will own physical telecommunications infrastructure such as towers, its chief executive said Friday.
Such companies, called tower companies, have been created by several other telecom firms here, and one analyst said it would help increase the company’s valuation in the run-up to an initial sale of shares that BSNL has already said it will do.
“We are in the process of appointing an independent consultant for this process,” said Kuldeep Goyal, BSNL’s chairman and managing director who did not give a time frame for this appointment. He added that the company would first work out how to do this with the help of the consultant and then take the proposal to its board.
In December 2007, India’s largest mobile phone firm Bharti Airtel Ltd, Vodafone Essar Ltd and Idea Cellular Ltd spun off their towers into a joint venture, Indus Towers Ltd. At the time, the company had around 75,000 towers and was valued at $12 billion (Rs53,280 crore today). Reliance Communications Ltd, India’s second largest mobile phone firm, has also spun off its tower business into a company, Reliance Infratel Ltd which has 46,000 towers and is valued at $6-8 billion.
Tata Teleservices Ltd, part of the Tata group, has also spun off its tower business into Wireless-TT Infoservices Ltd. This company has around 13,500 towers but its valuation couldn’t immediately be assessed by Mint.
As it becomes more difficult and expensive to put down the physical infrastructure for wireless networks, companies that have already done so are discovering that they can make money by sharing this infrastructure with other competing telecom firms. A few companies that are not in telecommunications have also gone ahead and entered the business with notable examples of these being Quippo Telecom Infrastructure Ltd, and GTL Infrastructure Ltd.
BSNL has around 46,000 towers of which 32,000 are those that support the GSM wireless technology platform and 8000 the competing CDMA technology platform. It also has or is in the process of building 6000 towers in rural areas. Analysts say that given the valuation of other tower firms, BSNL’s tower business could be worth anything between $8 billion and $10 billion.
R.K. Agarwal, director (planning and new services), who is also a member of the company’s board said a final decision on forming a new infrastructure company would be taken after the construction of 6000 towers in rural areas.
A third official who did not want to be named because he is not authorized to speak on the company’s behalf said BSNL would allow private telecom infrastructure companies to piggyback on its tower business, thereby opening up a new revenue stream. Such firms would then have functional telecom towers for which their only investment would be in network equipment. The analyst mentioned in the first instance said the move would help BSNL.
“BSNL can now focus on branding, customer service and expansions, than to focus on running towers,” said Harit Shah, telecom analyst with Angel Broking Ltd.