The Government's Strategic Move: BSNL Telecom Towers to Generate Revenue via Innovative Model for 20 Years

In a strategic move, the government is set to capitalize on Bharat Sanchar Nigam Ltd's (BSNL) telecom tower assets, totaling 10,014, through an Operate-Maintain-Transfer (OMT) concession spanning two decades. This pioneering initiative draws inspiration from the Toll-Operate-Transfer (ToT) framework employed in the highways sector.

The preliminary estimated value of the concession (IECV) for these 10,014 telecom towers stands at Rs 4,200 crore, reflecting an Internal Rate of Return (IRR) of 13.18 percent. This data stems from a crucial inter-ministerial meeting where the blueprint was finalized, and ET Infra has meticulously scrutinized the meeting's records.

To clarify, IECV denotes the present value (discounted at a rate marginally higher than the bank rate for debt, coupled with a standard rate for equity return) of the anticipated net free cash flow generated by the project from the valuation date until the culmination of the 20-year concession period.

The transaction process will adhere to a single-stage, two-part selection method, with the bid awarded to the entity tendering the highest overall upfront concession fee.

The Department of Telecommunications (DOT) has revealed that BSNL possesses an extensive network of 68,049 tower assets spread across 26 circles. Remarkably, 70 percent of these towers are fiberized, rendering them suitable for enhancing network and service capacities, catering to both 5G and 4G technologies.

Notably, since this is a brownfield O&M concession, the winning bidder need not make any capital investments in infrastructure.

Given the swiftly evolving technological landscape, a concession duration of 20 years has been judiciously chosen.

In order to encourage wide industry participation, the eligibility criteria prioritize financial capacity over technical qualifications. This inclusive approach also extends to allowing Alternate Investment Funds (AIFs) to partake in the transaction.

Bidders' suitability will be exclusively determined by their financial prowess. However, bidders are obligated to provide an assurance affirming their possession of the requisite expertise, either independently or through designated O&M partner(s), to fulfill the stipulated service level requirements.

The anticipated revenue streams for the concessionaire encompass diverse sources, including site rentals (comprising 79 percent of projected revenues), deployment of MEC servers (constituting 12 percent of anticipated revenues), the rollout of new technologies and microwaves (making up 6 percent of expected revenues), and EV charging services (amounting to 3 percent of projected revenues).