India’s Department of Telecommunications (DoT) plans to lease the fiber network of state-owned operator BSNL. The Department will open up the dark fibreowned and operated by BSNL, The Economic Times reports, citing an unnamed industry source. BSNL’s fiber network spans more than 800,000 km. The decision is expected to generate cash flow to support the operator’s capital and operational costs.
According to the same source, the proposal submitted to the Minister of State for Communications Sanjay Shamrao Dhotre mentioned a “sale and leaseback model” to fund BSNL’s capex. According to the same document, “InvITs [Infrastructure investment trusts] is one way to do this transaction. Direct sales and full or partial lease back from infrastructure fund which can pool fibre assets from other companies as well as from BharatNet can be another way”. InvITs manage income-generating infrastructure and allows participation from institutional and individual investors.
With the monetisation of fibre assets, BSNL could raise up to INR 300 billion annually from “dormant” assets, said Tepc vice-chairman Sandeep Aggarwal.
Market competitors Vodafone Idea and Airtel have recently proposed a combined optic fibre network entity into InvIT to reduce debt and free up cash. The plan follows Jio’s efforts to monetise its pan-India optic fibre assets to deleverage its balance sheet. Back in March, Bharti Airtel chairman Sunil Mittal said Airtel has “made an invitation. We did that in towers — if you remember, Indus Towers was created. And on the same lines, we have asked Vodafone Idea to come and join the fibre company”, Mittal said. “It will be a two-party JV. We are starting with our own fibre company and if Vodafone Idea brings its fibre assets, then they will get appropriate shares”, Mittal added.
According to a study by the Chamber of Commerce and Industry, Telecom Equipment Manufacturing Association (TEMA) and the Telecom Equipment Promotion Council (Tepc), BSNL’s fibre assets are worth around INR 540 billion.
BSNL’s board of directors is currently establishing the conditions for the fibre assets lease. According to an unnamed BSNL representative, these conditions would mainly focus on eliminating costs generated by the fibre network maintenance. The proposal also claims that BSNL’s assets are largely unused and that fibre assets on many routes could be shared with private players to generate additional revenue.―Telecompaper