India’s Union Cabinet has reportedly approved the spin-off of BSNL’s towers into a separate company and offered the struggling state-controlled telco and its peer MTNL a combined Rs6.27bn (US$98.3m) in compensation for surrendering airwaves sold at…
India’s Union Cabinet has reportedly approved the spin-off of BSNL’s towers into a separate company and offered the struggling state-controlled telco and its peer MTNL a combined Rs6.27bn (US$98.3m) in compensation for surrendering airwaves sold at the March auction.
The cabinet has cleared the tower spin-off “in principle”, the Economic Times cited a person familiar saying.
The Department of Telecommunications (DoT) will now form an inter-ministerial group to determine the market value of the towers and work out the capital and organisational structure of the new company, the report stated. The Union Cabinet will then consider their findings.
Both BSNL and MTNL have struggled to compete in India’s crowded and ultra-competitive market, in which Bharti Airtel, Vodafone India and Idea Cellular are the largest players. Both posted huge losses for the year ended March 2015: BSNL’s unaudited loss stood at Rs72.65bn (US$1.14bn), while MTNL’s totalled Rs28.93bn (US$453.69m).
BSNL, which operates in all areas of India apart from New Delhi and Mumbai – which are served by MTNL – could reportedly unlock a value of Rs200bn (US$3.14bn) from about 64,500 towers, more than 50,000 of which have optical fibre cable connectivity.
BSNL will reportedly receive Rs1.67bn in compensation for surrendering CDMA spectrum in four circles for the March auction. MTNL will get Rs4.84bn for relinquishing 1.25 MHz each in Delhi and Mumbai.
The government has reportedly looked at numerous options to revive the two operators over the past few years, including a merger, tower sales and shutting down the businesses altogether.
The cabinet, DoT, BSNL and MTNL were not available for comment.
