With around 130,000 towers and 800,000 route km of optical fibre cable (OFC) network, Bharat Sanchar Nigam Limited (BSNL) has one of the largest telecom asset portfolios in the Indian market. While most of these assets were developed as captive sites in recent years, BSNL has monetised them by sharing them with other operators and industry stakeholders to ensure the overall growth of the industry. BSNL today offers over 17,000 leased tenancies to other tower companies to help them meet their coverage requirement and business expansion needs. It is also open to sharing its fibre infrastructure. “Co-opetition”, that is, collaborative competition, is the company’s new growth strategy.
Taking a step further in tower monetisation, BSNL recently hived off its tower assets business to form a separate subsidiary. Besides unlocking BSNL’s tower business potential, the move will result in significant cost savings. It will also help achieve direct savings in terms of reduced licence fees and service charges on infrastructure revenue. External tenancies of BSNL’s towers are also expected to increase due to a focused approach by other operators. With proper positioning, BSNL can acquire a share of 16-18 per cent in the tower infrastructure industry, creating significant revenue potential. Further, the new company will have a leaner management (around 1,600 employees) and operational structure. It will outsource operations and maintenance, and sales and marketing activities.
Progress under government projects
Under the BharatNet project, more than 228,000 km of OFC has been laid covering 98,000 gram panchayats. Of these, around 95,000 are service-ready, with around 80,000 already connected. Meanwhile, tendering for Phase II is under way. Under the Network for Spectrum project, 51,000 km of duct has been laid. BSNL has also installed more than 2,300 base transceiver stations in Left Wing Extremism-affected areas, and is undertaking the development of telecom services in the north-eastern region.
Rising capex requirements, low margins and stringent regulatory requirements are the biggest challenges faced by operators. They are required to make substantial investments in telecom and broadband infrastructure to support the exponential growth in data traffic. On the policy and regulatory side, the recent reduction in interconnection charges and plans to replace these with a bill-and-keep system by 2020 have not been favoured by several operators. Meanwhile, high tax rates, licence fees and spectrum usage charges continue to negatively impact operator earnings. Further, difficulties faced in obtaining right-of-way permissions remain a point. The large investment requirements coupled with negative returns have forced operators to merge their operations or exit from the market, as has been evident recently.
Emerging policy needs
There is a serious need to treat telecom as an infrastructure sector, and consequently extend all the benefits of the latter such as incentives, lower taxation, rational licence fees and tax-free bonds to raise capital for telecom companies. Further, there is a need for reclassification of common telecom infrastructure so as to allow infrastructure providers to deploy and lease all their telecom assets under the infrastructure sharing model. Further, the government is expected to increase spending in the deployment of smart solutions and encourage innovative ICT solutions for public benefits. While internet of things (IoT) is emerging as a new area of investment, there are a lack of policy guidelines on security, technology standards, creation of a partner ecosystem, etc. in the domain.
The way forward
Going forward, BSNL is betting big on data growth in the country, which will be largely driven by consumers in rural and semi-urban areas. Its data strategy relies heavily on a massive Wi-Fi roll-out throughout the country. Currently, BSNL has about 20,000 Wi-Fi hotspots spread over more than 5,000 locations. It has partnered with companies such as L&T, HFCL and Tikona in this space. The company has an ambitious target of rolling out 100,000 hotspots by end 2018. Further, it is partnering with specific app providers and developing a separate app ecosystem to monetise data capabilities. BSNL has also sought spectrum in appropriate bands for offering country wide 4G services. Meanwhile, BSNL has high hopes from 5G, and was amongst the first few operators in the industry to sign MoUs with equipment vendors for rolling out the technology in India.
Based on a presentation by Shubha N. Bhambhani, Principal General Manager, BSNL