Thursday, August 6, 2015

Cabinet approves hiving off BSNL towers into new company

The Union Cabinet today approved hiving off 65,000 towers of state-run telecoms firm BSNL into a new company. The move is expected to help the company realize the full valuation potential of the towers. While BSNL already does already share towers passively with other telecom companies, the government believes a specialized subsidiary will be able help operations. The company currently earns about Rs 200 crore from tower leasing but it expects to earn as much as Rs 2000 crore after carving out a new company. An inter-ministerial group will be created, using officials from the department of economic affairs, ministry of employee welfare and department of public enterprises, to take a collective decision on this subsidiary's valuation. Sources say the company could be valued at as much as Rs 20,000 crore. The Cabinet also sanctioned "financial assistance" of about Rs 627 crore for BSNL and MTNL in lieu of surrender of 800 Mhz telecom spectrum. Will towers fetch high value? Terming the decision as "better late than never", Micromax Chairman and former Airtel CEO Sanjay Kapoor said the subsidiary will help free up cash for BSNL. "BSNL has towers in some prestigious locations and also has towers in dark locations across India. So this may help other telecom companies [improve their reach]," he said. He added that the move would be good for customers as more towers in the market would help improve tower density, and thereby call quality, for the bandwidth-starved country

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