The Department of Telecommunications (DoT) may soon bring out a policy framework that would enable the public sector telecom major Bharat Sanchar Nigam (BSNL) to lease out its vast 700,000-route-km fibre network to other telcos to ensure a steady cash flow to stay afloat.
“BSNL has been leasing out its fibre network to internet service providers (ISPs) for some time now. However, it had initially refrained from leasing it out to competing telcos. It has now started receiving requests from incumbent telcos for sharing its fibre network, which presents a revenue potential,” a senior government official said.
The official said there needs to be some clear policy framework, including the pricing that can be recommended by the Telecom Regulatory Authority of India (TraiI). BSNL has already conveyed the same to the DoT in the form of a proposal, he said, adding that a policy guideline is expected in the next two to three months.
A senior official in the telecom department said the government was working on the revival plan for BSNL and Mahanagar Telephone Nigam (MTNL) on a priority basis and whatever policy support was required would be taken up soon.
With more than 700,000 route km, valued at over Rs 50,000 crore, BSNL has the largest optic fibre network among all telcos. “BSNL also plans to take over the optic fibre network of Bharat Broadband Nigam (BBNL) for operations and maintenance. This was laid under the BharatNet programme and is around 200,000 km or so, with some overlap areas,” the government official said, adding that this, too, can be monetised to raise funds for the survival of the telco.
The cost of laying down fibre varies from Rs 5 lakh per km to Rs 1 crore per km (in metros where right of way is difficult). A telecom sector expert felt that BSNL can earn up to Rs 30,000 crore annually if it is able to efficiently monetise its fibre network. “The fibre network of BBNL and BSNL can be brought together under an InvIT and then it can be leased out to private telcos and other interested investors, too, can come on board then. This way, the largely under-utilised assets could be monetised, and efficiently done this can generate revenues worth Rs 30,000 crore per year,” he said.
However, around 40 per cent of BSNL’s fibre network is in the hinterland, where the pricing potential is less. “While leasing out to ISPs (who need fibre for around 20-25 km stretch mostly), BSNL has been able to fetch around Rs 20,000 or so per km for its network which is quite low. However, telcos would need far larger stretches that would also pass through cities, and hence the revenue potential is better,” said the official.
Telcos such as Bharti Airtel and Vodafone Idea have already approached BSNL for using its fibre network in the hinterland as some of them have won contracts to connect rural bank branches through optic fibre networks, he said.
A Bharti Airtel spokesperson declined to comment. Vodafone Idea could not be reached for a comment.
BSNL’s rural fibre network is, thus, critical for the telcos. Vodafone Idea has around 156,000 route km of fibre network, Bharti Airtel has 246,000 route km, and Reliance Jio around 300,000 route km.
Meanwhile, the DoT is in talks with banks to raise a Rs 2,500-crore loan (with favourable repayment terms) for BSNL. Further, the government would also release a tranche of Rs 850 crore to the telco to repay loans, vendors, and pay salaries. As of March, BSNL’s debt stands at Rs 13,500 crore, while that of the telecom sector at Rs 4.3 trillion.
The proposed package for BSNL includes a voluntary retirement scheme of Rs 6,365 crore and an equity infusion of Rs 6,767 crore for allotting 4G spectrum.―Business Standard