State-run telecom company Mahanagar Telephone Nigam Ltd (MTNL) is planning to enter a tower-sharing deal with Essar Telecom Infrastructure Pvt Ltd (ETIPL) for its Mumbai circle, a senior MTNL official told FE .

The move has come at a time when MTNL is gearing up to launch 3G services in Mumbai on a commercial basis. MTNL has been sharing towers with various other infrastructure companies like Tata-Quippo, Reliance Infratel and GTL, in the Mumbai circle. The deal proposed with ETIPL is approximately for 140 towers to be shared by MTNL.The official, who did not wish to be identified, said the deal has been agreed upon by both the companies. ?Final talks are on and the deal is yet to be finalised in the coming few days,? said a source close to the development from ETIPL.

MTNL currently has 600 towers in the Mumbai circle and is planning to add another 150 in Mumbai and 90 in suburban Navi Mumbai by this financial year. ETIPL has set up telecom tower sites in Maharashtra , Madhya Pradesh, Rajasthan, Tamil Nadu, Kerala, Karnataka and Andhra Pradesh, UP (east and west), Bihar, Orissa, Gujarat and Haryana circles. It has plans to cover the rest of India . The company has an aggressive plan of installing 20,000 towers by 2010. ETIPL officials declined to comment on the matter.

MTNL has gone ahead with the tower sharing deal to expand its network rapidly to make it 3G capable. It also has to improve its quality of service to retain its subscribers. Tower sharing as a concept has gained huge prominence amongst infrastructure companies and telecom operators. Tower sharing across technologies – GSM and CDMA?is expected to mitigate congestion and reduce call drops. The company has recently invested Rs 210 crore for its 3G equipment and its installation in the Mumbai circle. As per the MTNL official, the company still has to calculate the financial impact of this tower sharing deal with ETIPL. As stated earlier by the company, it is also looking at de-merger of its telecom tower arm. MTNL added 38,036 subscribers for the month of May as against its previous month addition of 45,553 subscribers. MTNL on Friday closed at Rs 109.5, down by 5.4% from the previous day close on BSE.