The Cabinet on Tuesday approved hiving off the mobile tower assets of Bharat Sanchar Nigam Ltd (BSNL) into a separate company, fully owned by BSNL.

It has authorised BSNL to monetise its telecom tower infrastructure with the formation of a separate subsidiary, said an official release.

BSNL owns 66,000 of the 4.42 lakh towers in the country. The government is looking at external tenancies and garnering revenues for the new, ‘dedicated’ tower company of BSNL, the government release said.

The telecom tower industry has emerged as an independent business to harness the potential for sharing of infrastructure. The business model arose from the need to achieve economies of scale and to reduce capital investment costs for providing mobile services. The Department of Telecommunications (DoT) policy allows sharing of passive infrastructure — the tower structure, diesel generator sets, battery units, power interface unit and air-conditioning. This has facilitated the growth of the telecom infrastructure industry.

A tower company essentially owns the passive infrastructure assets and leases it to telecom service providers, enabling them to minimise duplication of investments and economise on costs of operation and maintenance (O&M), thereby improving profitability.