The mobile tower assets BSNL will be hived off into a separate company, fully owned by BSNL, according to a cabinet decision on Wednesday. The cabinet has authorised BSNL to monetise its telecom tower infrastructure with the formation of a separate subsidiary, said an official release.
BSNL owns 66,000 telecom towers out of the total 4.4 lakh towers in the country. “An independant, dedicated tower company of BSNL with a focussed approach will lead to rise in external tenancies and higher revenue for the company,” said the official release.
Notably, almost all the other telecom service companies in India are making moves towards consolidation, as the incumbents look for scale and operational efficiencies to take on the onslaught of competition from the giant new entrant Reliance Jio. The Idea-Vodafone merger is on the cards, as as Idea Cellular seeks shareholder’s nod for its proposed $23-billion merger with Vodafone India.
Rajat Sharma, an analyst with Sana Securities, believes that the telecom space is fundamentally weak, and has very limited avenues to augment revenues. “The companies are fighting a fierce battle to no avail, the customer seems to be the only one to benefit,” he had told FE Online last month. According to him, the view for the sector remains weak, as he believes that the advent of free internet services offered by Jio provides very little opportunity for other players in the industry to add subscribers. Moreover, there are concerns that with the competitors taking active steps to build scale, Reliance Jio may further intensify its offerings, putting even more pressure on the incumbents.