The Hindu Business Line : BSNL mulls hiving off infrastructure into a new co

New Delhi, April 24 With an eye on generating additional revenues, State-owned Bharat Sanchar Nigam Ltd is planning to hive off its telecom infrastructure into a separate company. BSNL has 32,000 base stations for GSM-based mobile services and another 7,000 for its CDMA services. The company wants to lease out this infrastructure with private operators, especially the new licence holders who are looking for a quick pan-Indian roll out.

The move from BSNL is a significant change of its earlier stance, when it had refused to share its national network with other operators on the grounds that the pan-Indian presence was its unique proposition to compete with the private operators.

However, in doing so the company was being isolated in the industry where everyone is riding on each other’s network. This was leading to a huge competitive loss to BSNL as other cellular companies were heavily depending on each others’ infrastructure. Companies such as Bharti Airtel, Idea Cellular and Vodafone Essar are reaching out to new areas riding this way. Some operators have hired up to 60 per cent of their passive infrastructure requirement from others as it helps them drive down costs significantly.

Though BSNL has one of the largest networks in the country, 60 per cent of the country’s population is yet to be connected and going solo would mean huge investments, which may not be sustainable given that tariffs in India are the lowest in the world. BSNL has one of the widest network coverages in the country and by demerging the infrastructure it will be able to get additional revenues by selling space to other operators.

In another development, BSNL has put its initial public offering plans on the backburner. BSNL had earlier approached the Communications Ministry seeking permission to go in for an IPO. However with the employees’ union strongly opposing it, the management has been forced to put its plans on hold.

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