BSNL to start talks on tower business soon

BSNL to start talks on tower business soon

Kolkata: State-run telecom operator Bharat Sanchar Nigam Ltd (BSNL) is likely to begin discussions with potential investors within days regarding its mobile towers network.

The firm, which has 40,000-45,000 towers across the country, is currently weighing various options.

“Any business proposal that would create new revenue streams would be considered," chairman and managing director S.C. Misra said, commenting on specific proposals received from Viom Networks Ltd, one of India’s biggest providers of telecom towers.

Viom has suggested that BSNL could either sell its towers or share them with other telecom companies, according to Arun Kapur, Viom’s chief executive officer.

If it chooses to keep the towers, Viom has proposed that it could manage the tower-sharing arrangement for BSNL.

The state-owned firm is possibly the only one in India that does not share towers with others.

“We are evaluating Viom’s proposals," said Misra, adding that officials of both companies could meet to discuss these within a week.

To be sure, BSNL’s board will take a final call on how to generate revenue from its towers. But if it decides to sell them, it is likely that BSNL will need the clearance of the Union government as well.

That apart, BSNL might have to contend with significant resistance from its employees, too, its unions being opposed to any form of privatization.

An outright sale of its towers could enable BSNL to turn the corner immediately, according to Hemant Kanoria, chairman and managing director of Srei Infrastructure Finance Ltd, which controls Viom.

BSNL, which is struggling to cope with rising employee costs, had in fiscal 2010 reported a net loss of 1,823 crore.

“For BSNL, it is important to tap new revenue streams at this juncture," said Kuldeep Goyal, the firm’s former chairman and managing director.

In June, tower firm GTL Infrastructure Ltd had offered to pay around 60 lakh a tower to buy Reliance Communications Ltd’s entire network in a cash-and-stock deal. The deal, however, was aborted within months even though the two firms had agreed on valuation.

At such valuations, BSNL could get at least 24,000 crore from the sale of its towers. It isn’t immediately known how much BSNL has spent on building the towers, but a tower typically costs 12 lakh if built on a rooftop and 25 lakh if erected on the ground.

If BSNL decides to sell its towers, it would have to spin them off into a separate firm.

Among other firms that would closely watch what BSNL decides are GTL and American Tower Corp., which is looking to expand in India.

BSNL’s reach in rural areas is of strategic significance to private operators, says Kanoria. “Whoever acquires BSNL’s towers would gain instant access to vast new territories."

The sale of towers is unlikely to affect BSNL’s services because it would continue to use them as a tenant.

India is the world’s fastest growing mobile telecom market with at least 752 million users, and is second only to China.