Power Grid Corp is readying to hive off its telecom business into a separate subsidiary by June and targets a revenue of Rs 1,000 crore during the current fiscal year. It also aims to monetise its transmission assets through securitisation rather than sell to its infrastructure investment trust (InvIT), as it finds the former more efficient.
Power Grid, primarily a power transmission company, has a pan-India telecom network of over 82,000 km with optic fibre and optical ground wire; it also offers transmission towers for mobile communications. It has licences for national long-distance services, category A internet services, and registration as an infrastructure provider.
The company told analysts this week that it expects strong growth prospects in the telecom business. Last week its board approved capital expenditure of around Rs 259 crore to augment its telecom access network.
In FY23 the telecom business reported revenue of Rs 916 crore while earnings before interest and tax were Rs 548 crore.
Within the telecom business the company is also looking at data centres as a significant business stream and it recently received approval from the Central Electricity Regulatory Commission to set up a data centre.
The company at present provides high-speed leased lines, MPLS-VPN services, data services, and infrastructure services. It is building a 1,000-rack data centre in Manesar while an edge data centre and hyper-scale data centre are in the works.
Monetisation through securitisation
Power Grid set up an InvIT to monetise its transmission projects and has transferred five projects to it.
The company, however, plans to use securitisation of cashflows to raise funds, rather than selling projects to the InvIT. Last year, due to the rise in interest rates, it saw a decline in its asset valuations leading to lower monetisation against its target of Rs 6,800 crore. It raised Rs 3,500 crore in FY23 through securitisation of cashflows. In the current fiscal year it plans to raise Rs 6,800 crore through the securitisation route.