The union cabinet chaired by the prime Minister Narendra Modi has given its approval for hiving off mobile tower assets of Bharat Sanchar Nigam Limited (BSNL) into a separate company, fully owned by BSNL.
Presently, BSNL has more than 66,000 mobile towers in comparison to 442,000 pan-India and with the cabinet decision, the company can now monetise its telecom tower by forming a separate subsidiary company.
BSNL can also increase its tenancy from the present situation and thereby generate higher revenue from its tower asset. In the new company, BSNL can also bring in a strategic investor by diluting its stake in tower subsidiary.
The telecom tower industry has emerged as an independent business to harness the potential for sharing of infrastructure and the business model ha arisen from the need to achieve economies of scale and to reduce capital investment costs for providing mobile services.
The Department of Telecommunications (DoT) policy allows sharing of passive infrastructure i.e. the tower structure, diesel generator sets, battery units, power interface unit, air-conditioning etc., which has facilitated the growth of the telecom infrastructure industry.
A tower infrastructure company essentially owns the passive infrastructure asset and leases it to telecom service providers enabling them to minimize duplication of investments and economize on costs of operation and maintenance (O&M), thereby improving profitability.