The Union Cabinet has approved hiving off mobile tower assets of Bharat Sanchar Nigam Limited (BSNL) into a separate company, fully owned by BSNL.
This approval authorizes BSNL to monetize its telecom tower infrastructure with the formation of a separate subsidiary company.
Currently, BSNL owns 66,000 telecom towers in the country, out of the total 4.4 lakh towers. "An independent, dedicated tower company of BSNL with a focussed approach will lead to rising in external tenancies and higher revenue for the company," said the official release from BSNL.
Telecom Minister Manoj Sinha said that "The move is aimed at harnessing full potential (of the tower assets of BSNL). Bharat Sanchar has a tenancy ratio of 1.14 as compared to 1.9 of the private operators. This will increase BSNL's tenancy ratio and other telcos can utilize BSNL towers."
The telecom tower industry has emerged as an independent business to harness the potential for sharing of infrastructure. The business model arose 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 -- the tower structure, Diesel Generator sets, battery units, power interface unit and air-conditioning -- which has facilitated the growth of the telecom infrastructure industry.
A tower infrastructure company essentially owns the passive infrastructure assets and leases it to telecom service providers enabling them to minimise duplication of investments and economise on costs of Operation and Maintenance (O&M), thereby, improving profitability.
Besides the captive model in BSNL and MTNL, where the service provider owns its passive infrastructure also, there are three different business models within the telecom tower industry. These are companies created by hiving off the tower assets portfolios of service providers into subsidiaries; companies established as independent joint venture entities by service providers jointly; and companies promoted by specific service providers but established as independent entities with the promoter being the anchor tenant for the tower company.