State-owned Bharat Sanchar Nigam Ltd (BSNL) has invited bids from private firms to roll out 4G services across 14 circles on a non-exclusive revenue-sharing franchise model.
BSNL has categorised the 14 circles, where it has spectrum to offer 4G services, into six zones, and each prospective bidder can bid for each of the six zones on the amount of revenue share they can offer.
However, a winning bidder will be allowed to provide services only in maximum three zones, according to the bid documents reviewed by FE.
“The minimum quoted percentage of revenue share to BSNL (in a zone) shall be 50%. However, bidder may quote more percentage of revenue share to BSNL in their financial bid for a Zone,” BSNL said in its tender document.
BSNL has 20Mhz of spectrum in the 2.5 Ghz band in these 14 circles and is already providing WiMAX services in these places. The new tender is to provide 4G services based on Long-Term Evolution, or LTE technology. BSNL has set June 28 as the deadline for receiving bids from prospective bidders.
“There were interests from companies to roll out 4G services on behalf of BSNL. The private firms will sell the services while using BSNL network,” a top official told FE. “The model will help to reduce capex and increase subscribers.”
The launch of 4G services by BSNL is inevitable and for the survival of the company as many of its competitors have already rolled out 4G networks in most parts of the country, says Girish Trivedi, co-founder of Monk Consulting. “From a faster go to market perspective this strategy can work as their Organization is not geared or tuned to be a data services company,” Trivedi said.
“A serious Partner can bundle and market products better as they will be agile organisations.”
The development assumes significance with the state-owned operator joining the ranks of private telecommunications companies to ramp up its 4G services to offer high-margin internet services on smartphones to tablet computers.
The move comes at a time when BSNL, the flagship telecommunications company, is focussed on expansions and turning profitable by 2020.
BSNL had a operating profit of R672 crore during the last fiscal through March 2015, while its revenue grew 4.16% to R28.645 crore.