Cabinet decides to revive BSNL, MTNL

Last year, the government had in principle approved BSNL’s plan to hive off its tower assets into a separate entity.

By: ENS Economic Bureau | New Delhi | Published: August 6, 2015 3:22 am

In an effort to revive the loss-making telecom PSUs BSNL and MTNL, the Union Cabinet on Wednesday approved certain financial incentives for them.

Accordingly, it gave its nod to BSNL to hive off its towers into a separate company, which would help it monetise it.

In addition, both PSUs will get refunds for surrendering part of their CDMA spectrum that was put up for auction this year in March. The compensation works out to Rs169.16 crore for BSNL and Rs 458.04 crore for MTNL. While the compensation for BSNL comes in lieu of surrendering one block of 1.25 MHz of CDMA spectrum in four circles, for MTNL it is for surrendering 5 MHz each in Delhi and Mumbai. BSNL has around 64,000 towers across the country valued at around R20,000 crore according to industry estimates.

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All the private telcos hived off their towers around 10 years ago.

Last year, the government had in principle approved BSNL’s plan to hive off its tower assets into a separate entity.

BSNL also plans to monetise its other passive infrastructure like factory, land assets and training centres. The monetisation of other related passive infra assets could help BSNL raise another Rs 10,000-15,000 crore, according to estimates.

So far it has leased around 5,471 towers to various private telecom companies earning a revenue of Rs 432.6 crore at the end of May this year.

BSNL has tower sharing agreements with most private players. As its towers are spread across the country, even in the remote areas, private telcos prefer to share BSNL’s infrastructure. Consequent to approval, the DoT can constitute an inter-ministerial group for working out capital and organisational structure of new company after market valuation of its tower assets is done, a source said. FE & PTI

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  1. R
    Aug 6, 2015 at 4:05 am
    First step towards closing down the telecom giants....
    1. N
      Aug 6, 2015 at 8:39 am
      It is good that the government is nuturing BSNL. It is because of BSNL that mobile phone is so common in India. There was a time when for mobile phone one had to pay Rs. 16 per minute for incoming calls and rupees 8/= per minute for outgoing calls. So mobile phone was only a curiosity for most people and only a few could afford it. It was only BSNL that made incoming calls free and out going calls cheap that rates of mobile phones dropped in India. Rapidly mobile phone became rife. It is amazing and pleasing to see that the lowest level of worker can afford to keep a mobile phone. The only problem with BSNL is the unprofessional atude of the workers (govt. employees ) eg. limited time of payment facilities, poor grievance redressal, etc. , tha the BSNL isn't as por as it could be.
      1. R
        Aug 6, 2015 at 8:53 am
        The only way to revive public sector units which are non monopolistic, is to sell them to private investors. Any Government be it congress or BJP cannot control themselves from interfering in the PSU affairs. When government has decided to privatise a particular business, then it should not involve themselves in the business. Rather they have to nurture insutions like TRAI etc to regulate that business. That's the only way to keep compeion in business and consumers benefit. Take the case of BSNL/MTNL. All government offices (central/state/PSU banks) are forced to take telephone connections from BSNL. Over 65 % of the BSNL revenues come from them. The government should sell spectrum and earn revenue and just regulate the business.
        1. V
          V. Sethuraman
          Aug 6, 2015 at 3:59 am
          At last the minister has taken a decision which the previous government failed to do. Indecision on how to run BSNL/MTNL has caused a lot of havoc to these organisation.
          1. Y
            Yash Pal
            Aug 6, 2015 at 8:21 am
            If stranglehold of the ministry is removed and given freedom of operation, both the companies may revive fast.
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