State-owned Bharat Sanchar Nigam Ltd (BSNL) has drawn up a two-pronged restructuring strategy to shore up its financials and dwindling market share. In the first, the company will hive off its nearly 35,000 towers into a separate company, as private operators have done. The second is a move towards business process re-engineering (BPR), wherein BSNL would revamp its entire process of customer acquisition, so that a new telephone connection can be given in a day instead of seven now.
The tower company would be a 100% subsidiary of BSNL, which would be listed later. It would easily command a valuation of $6-8 billion.
Company officials said for both the tasks, BSNL would appoint consultants to advise it on how to go about the whole process. For instance, the tower consultant would tell BSNL the ways to speed up the hive-off and the subsequent listing.
In the BPR process, the aim is to ensure that fixed line, broadband and leased line connections can be granted within a day against the average time span of a week at present. BSNL has the largest landline base at around 35 million users, but is facing rampant surrendering of connections. It has the largest broadband users at 2.5 million and sees it as a major growth area. The company has about 39 million GSM mobile users.
?We plan to hire a consultant to study our entire process of customer acquisition and suggest us ways of reducing the time span of providing the connections,? said an official.
BSNL, which used to be the largest telecom operator in the country in terms of the subscriber base of fixed plus mobile was pushed to the second slot last month by Sunil Mittal-led Bharti Airtel. In the mobile segment, within the GSM service providers, it ranks after Bharti and Vodafone Essar.
According to analysts, the decision to hive off the tower business would help the company save the licence fee paid to the government on a revenue share basis. Like other operators, BSNL has also entered into tower sharing pacts with private operators. However, since the private operators have hived off the tower business into separate arms, the revenues they earn from leasing out towers is not counted into the adjusted gross revenue (AGR), a percentage of which is payable as licence fee.
As is known, all major telecom operators have de-merged the tower arm from their parent firm and are seeking separate valuation, partners and listing. With the government allowing passive and active infrastructure sharing and operators going for pan-India expansion, there?s immense scope for the tower business.
There are around 1.85 lakh telecom towers in the country and to keep pace with the growing subscriber base it is estimated that at least 3 lakh towers would be added by 2010.