For cost-competitive service rollout; opening of bids on Oct 31

Sharing Infrastructure

This is the first time that the national telecom major has sought to take any infrastructure support from other telecom companies.

BSNL wants to get into an hiring agreement with the infrastructure providers for a period of 15 years.

Thomas K Thomas

New Delhi, Oct. 28 In a significant change of its stance, State owned Bharat Sanchar Nigam Ltd has decided to ride on private operators’ cellular infrastructure in a bid to roll out its services faster and cheaper.

Passive Infrastructure

The PSU has invited bids from private companies who are willing to lease out their passive infrastructure such as tower, shelter, generator sets and other power systems.

This is the first time that the national telecom major has sought to take any infrastructure support from other telecom companies. So far BSNL had refused to either share its infrastructure with any of the other operators or hire from others.

However, this was leading to huge competitive loss to the PSU as other cellular companies heavily depend on each others’ infrastructure. Companies such as Bharti Airtel, Idea Cellular and Vodafone Essar are reaching out to new areas riding on each others’ network.

Some of the operators have hired up to 60 per cent of their passive infrastructure requirement from others, as it is helping 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 all alone would mean huge investments, which may not be sustainable given that tariffs in India are the lowest in the world.

The move from BSNL could also be due to considerable delay in procuring new equipment for its cellular business. The tender floated in the early part of 2006 for connecting 60 million new mobile subscribers, which included supplying passive infrastructure, was awarded only last month due to legal and political interventions.

Therefore, BSNL has now invited bids from just private mobile companies such as Reliance Communication, Bharti Airtel and Essar — these together have more than one-lakh towers across the country.

Even standalone tower companies such as GTL, American Tower Company and Quippo could be vying for the project. BSNL will open the bids on October 31, which is also the last day for submission of bids by any of the infrastructure providers.

As per the conditions mentioned in the bid document, BSNL wants to get into a hiring agreement with the infrastructure providers for a period of 15 years, extendable by another five years.

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(This article was published in the Business Line print edition dated October 29, 2007)
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