Hiving off telecom tower business: One more attempt from BSNL to survive

Telecom Lead India: Hiving off telecom tower business
will be one more attempt from BSNL to survive in the mobile market place
dominated by Bharti Airtel.

Media reports suggest that the state-run BSNL will
appoint a consultant to prepare a roadmap for hiving off its telecom tower
infrastructure business into a separate company.

BSNL Chairman and Managing Director R K Upadhyay reportedly said BSNL will
issue expression of interest this week to appoint consultant that will suggest
the roadmap.

BSNL’s poor marketing and lack of network expansion
affected the revenue growth and profitability of the state-run telecom service

BSNL has posted 8 percent decrease in revenue to Rs
29,688 crore in 2010-11 against Rs 32,045 crore in the previous fiscal
Income from services was Rs 27,044 crore in 2010-11 against Rs 27,913 crore.


The company’s net loss has gone up to Rs 6,384 crore in
2010-11 from Rs 1,822 crore in 2009-10. Loss before tax was Rs 6,578 crore in
2010-11 as compared with Rs 2,197 crore. Decline in revenue and increasing
expenditure resulted in losses for BSNL.

 BSNL is so late to leverage its tower business. Indian
mobile operators such as Bharti Airtel, Reliance Communications, Tata
Teleservices, Idea Cellular, Vodafone, Aircel, etc. gained thanks to tower
business valuations.

 Reliance Communications has been looking for a strategic
investor its tower business. Due to uncertain market conditions, Reliance
Communications could not finalize its partner.

Idea Cellular is getting feelers for making investments
in its tower infrastructure.


Recently, Bharti Airtel said Bharti Infratel will look at an IPO
route to raise funds
. Bharti Airtel owns 33,660 towers in 11
circles. It is likely to list December-end to raise Rs 4,000-4,500 crore,
depending upon regulatory approval and market sentiments. During the last
fiscal, Bharti Infratel posted a net profit of Rs 687 crore and a turnover of
Rs 9,511 crore, which includes a proportionate share of its revenues in Indus


The ailing BSNL has around 70,000 towers.

Recently, Sam Pitroda Committee recommended BSNL to hive off BSNL tower
business into a separate entity.


The Committee has suggested to form separate subsidiary
company for tower related infrastructure to aggressively market to other public
and private sector customers and unlock whole/substantial potential value
through strategic stake sale, mergers and acquisition or separate IPO.

BSNL is taking several steps to reduce its losses and to
improve its financial performance
. The new steps include:
optimizing CAPEX and OPEX through convergence and consolidation of
infrastructure; strengthening of stable revenue streams through concerted focus
on broadband and enterprise business with major focus on government projects;
focusing on the revenue from top 100 cities for monitoring purpose; sustained
operational focus on customer care, service delivery, service assurance,
revenue management and asset management; aggressive push on data usage and
value added services; clear cut segregation of commercial activities from
social obligation to ensure sustainable growth and progressive migration of
current network to next generation network thereby ensuring convergence,
consolidation and seamless delivery of various services to end customers across
different technologies.


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