'BSNL to Hive Off Tower Business Into a New Subsidiary'

State-run telecom service provider Bharat Sanchar Nigam Ltd (BSNL) is all set to hive off its towers business into a separate subsidiary, the valuation of which could be in the region of Rs. 20,000 crore ($3 billion), Chairman-cum-Managing Director Anupam Shrivastava has said.

"We already share our towers with private players. We are looking at a subsidiary company within the company. We want more focus on tower sharing. The business is small now just Rs. 200 crore. But the potential is Rs. 2,000-2,500 crore annually," Shrivastava told IANS in an interview.

"BSNL will hold majority stake in the new company. A cabinet note has already been moved."

According to a Deloitte India report, India currently has around 400,000 telecom towers and the growth is expected at around three percent annually over the next four-five years to take the numbers to 511,000 by 2020. Indus Towers is the market leader with 31 percent share, followed by BSNL with 18.1 percent.

The state-run enterprise currently has 75,000 towers out of which it intends to shift some 65,000 to the new entity. It is the only company with towers in all the difficult and strategic areas like in the northeast, Jammu and Kashmir and the so-called Naxal belt.

The move for a separate towers company, the top official explained, will also give some breather to the company's bottom line. The year-on-year loss of the company stood at Rs. 7,000 crore in 2014-15.

"A separate subsidiary means a separate profit and loss centre and a separate sales and marketing team. It will be away from our core business of telecom services. The cabinet decision can come any time probably this month. It is likely that by this fiscal the subsidiary will be formed."

Shrivastava said a consultant has been hired and a project report was being prepared for the past year-and-a-half.

"Initial estimation shows the valuation of the towers company will be anywhere around Rs. 20,000 crore. It will work at an arms length with our core business. That means even BSNL will have to give rental to the towers company," said Shrivastava, appointed on Jan 15, 2015, for five years.

"It is important to grab the opportunities in sales and marketing as and when they arise. It will equally change the mindset. People think sharing towers will cut into your business. This is not true. Once we have a subsidiary, that focus will automatically come," he said.

"The private operator will anyway come close to your business. It's better to leverage your strengths."