New Delhi: State-run BSNL is looking to generate Rs 1,600 crore revenue in the next five years by hiving off its tower business into a separate company.
In a presentation to Telecom Minister Kapil Sibal last week, the loss-making telecom company said hiving off its tower assets into a separate entity will generate almost Rs 91 crore in 2013-14 itself.
BSNL has around 70,000 telecom towers and has said earlier it was looking to explore various business models that can realise value of its infrastructure.
In a detailed timeline for the hive-off which has been presented to Sibal, BSNL has said that a consultant to hive off the tower assets would be appointed by 31 December and his work should be completed by April next year.
Hiving off the tower business is one of the major pillars of BSNL's revival plan, in line with recommendations made by Sam Pitroda Committee.
A healthy, profitable PSU like BSNL declared Rs 10,183 crore in profits in 2004-05 before posting a loss in 2009-10. The net loss of BSNL widened to Rs 8,851 crore during 2011-12 against just Rs 1,823 crore two years back in 2009-10. During 2010-11, losses rose to Rs 6,384 crore mainly due to hefty outgo on employees’ salary and expenses borne by the PSU for procuring 3G and BWA spectrum.
So hiving off tower assets is a crucial step towards BSNL's turnaround. The Pitroda committee had suggested that BSNL form a separate "subsidiary company for tower-related infrastructure to aggressively market to other public and private sector customers and unlock whole/substantial potential value through strategic stake sale, mergers and acquisition or separate IPO (Initial Public Offer)."
In fact, not just hiving off the tower business, BSNL is also planning several other steps to get back into black. Chairman and MD R K Upadhyay had told Firstpost earlier that BSNL has already begun the process of monetizing its multiple assets, hiving off some businesses and focusing on expansion of the GSM business.
In the presentation made last week, BSNL has given a detailed timeline for each of these processes:
1) Consultant to submit report for utilisation of land and building assets for call centres/BPOs/software parks by April next year. BSNL has estimated that use of land and building will generate upfront revenue of Rs 250 crore in the next fiscal and rental income of another Rs 250 crore from 2016-17 onwards. The telco owns prime land in cities like Mumbai, Hyderabad, Chennai and Gurgaon.
2) Utilisation of telecom factory infrastructure which will generate Rs 100 crore in revenue by 2014-15. These factories are situated in Mumbai, Jabalpur, Richhai, Bhilai, Kolkata, Gopalpur (Kolkata) and Kharagpur. Products manufactured here include SIM cards, optical fibre cable accessories, cellular and microwave towers etc. BSNL is looking to lease them out to other manufacturers and develop these factories into separate profit centres.
3) Providing broadband connectivity to 15000 schools by March next year which would mean revenue generation of Rs 400 crore per year
While BSNL has laid out plans to revive itself, its owner, which is the Government itself, needs to also pitch in by clearly delineating a timeline within which the bleeding PSU can get back more than Rs 8,000 crore which the Government owes it. As per the presentation, the Department of Telecom (DoT) is sitting on a total outstanding of Rs 8,557 crore towards BSNL. This includes Rs 6724.51 crore towards BWA spectrum.
BSNL had been compelled to acquire BWA and 3G spectrum in all 22 circles in 2010 by the Government. Now, the Government has in principle agreed that BSNL surrender BWA spectrum in some circles.
The telco had to fork out Rs 19,000 crore to acquire this spectrum and while it has no plans to surrender any spectrum for 3G services, it can get back a substantial sum by partially surrendering BWA spectrum in those geographies where retaining it makes no business case.
Also, the DoT has to reimburse BSNL for deficit on account of rural wireline services where sector regulator Trai has recommended reimbursement of Rs 1,500 crore for the first year and Rs 1,250 crore for the second year. DoT is yet to approve these reimbursements.