Mansi Taneja / New Delhi May 24, 2011, 0:35 IST
Bharat Sanchar Nigam Ltd (BSNL) is planning to rope in private equity investors, including telecom companies, to pick up stake in a new company that will be floated by hiving off the state-run telecom major’s towers.
This is the first time that BSNL is looking for private sector investment. It has over 40,000 towers across the country, which, based on previous deals, are valued at around Rs 16,000- Rs 20,000 crore.
In the last few months, most tower company acquisitions have been undertaken at an average value of Rs 50 lakh per tower. Since BSNL towers are exclusively used by the company, they may fetch a lower value. The company is in talks with other telecom players to rent out this capacity.
“We are considering to hive off our towers into a separate company. This will enable us to unlock the true value of towers. Subsequently, we may look at inducting private equity investors, including telecom companies,” a senior BSNL official told Business Standard on the condition of anonymity. He did not say what percentage of the equity would be divested.
If permitted by the company’s board, BSNL will have to seek government’s approval to go in for private equity.
“The move, if implemented, will become an additional source of revenue for the company in these difficult times,” the official added.
Spinning out the tower business into a separate entity and then getting in investors has been a common strategy for most Indian telecom players. Bharti, Vodafone and Idea Cellular have spun off their towers into a common company called Indus Towers, which has over 100,000 towers. Tatas have also tied up with independent tower company Quippo to set up a joint venture to manage their towers.
Last year, Reliance Communications had started talks with GTL Infrastructure to sell its tower unit. The deal was valued at Rs 50,000 crore but was later called off, reportedly over the issue of high valuation. At that time, Reliance had about 50,000 towers while GTL had about 30,000 towers. Reliance, subsequently, engaged in discussions with financial investors for its tower unit.
BSNL has the advantage of having towers in remote areas, which can be used by other companies to expand.
A committee under Sam Pitroda, set up to find ways for revival of BSNL, had also suggested that it create a separate subsidiary for towers and all related infrastructure to monetise the assets.
Increased competition and dipping rates have taken a toll on the PSU, which was once among the top three players in the mobile industry. For the first time since its inception in 2000, BSNL posted a loss of Rs 1,823 crore in 2009-10.
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