Sunday, August 15, 2010

PowerGrid mulls foray into telecom-tower business

In a bid to unlock the value of its tower assets prior to the proposed follow-on offer, state-run PowerGrid Corporation of India is likely to foray into telecom-tower business, a top company official said."PowerGrid is mulling venturing into telecom-tower business either by forming a new company or through a joint venture," the company official who did not wish to be identified told PTI.Leasing out the towers to some of the existing players is also being considered, he said. "...but everything is in the preliminary stage." The company has approached global auditing firm KPMG to prepare a report on the diversification and the same is expected in one month, the official said.PowerGrid owns over 1.5 lakh power transmission towers in the length and breadth of India, with almost 70 per cent of them located in semi-urban and rural areas, which will make it the largest telecom tower company in the country.With the rolling out of 3G services that need higher tower density for better services, the prospects of PowerGrid in the new business is brighter and the expected revenue generation may go up to a few thousand crores based on the tenancy ratio, the official said.At this moment, the company is trying to assess the number of its power transmission towers to be used for the telecom business. "The valuation will vary based on different geographies," he said.PowerGrid diversified into the telecom sector four years ago which offers end-to-end leasing of bandwidth to telecom operators, through its overhead transmission infrastructure.The company owns fibre-optic network of 20,000 km which will be expanded to 30,000 km by 2012.Bharat Sanchar Nigam Ltd, Tata Teleservices, Bharti Airtel and Reliance Communications are among the customers of its telecom division, which generates annual revenue of Rs. 150 crore."We expect a multi-fold increase in revenue once we enter into telecom-tower business," the official said.According to analysts, the move will help the Government to fix the FPO price band close to Rs. 150. The shares of the company were traded at Rs. 102 on Aug 13 at BSE.