The Union Cabinet on Wednesday approved hiving off the mobile tower assets of Bharat Sanchar Nigam Ltd (BSNL) into a separate company, fully owned by BSNL.

It has authorised BSNL to monetise its telecom tower infrastructure with the formation of a separate subsidiary, said an official release.

BSNL owns 66,000 telecom towers in the country, out of the total 4.4 lakh towers. The government is looking at external tenancies and garnering revenues for the new, “independent dedicated” tower company of BSNL, the release added.

The telecom tower industry has emerged as an independent business to harness the potential for sharing of infrastructure. The business model arose from the need to achieve economies of scale and to reduce capital investment costs for providing mobile services.

The Department of Telecommunications (DoT) policy allows sharing of passive infrastructure -- the tower structure, Diesel Generator sets, battery units, power interface unit and air-conditioning -- which has facilitated the growth of the telecom infrastructure industry.

A tower infrastructure company essentially owns the passive infrastructure assets and leases it to telecom service providers enabling them to minimise duplication of investments and economise on costs of Operation and Maintenance (O&M), thereby, improving profitability.

Besides the captive model in BSNL and MTNL, where the service provider owns its passive infrastructure also, there are three different business models within the telecom tower industry. These are companies created by hiving off the tower assets portfolios of service providers into subsidiaries; companies established as independent joint venture entities by service providers jointly; and companies promoted by specific service providers but established as independent entities with the promoter being the anchor tenant for the tower company.

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