In order to unlock the value of its tower assets before the follow-on offer, expected in October, state-run transmission major PowerGrid Corporation may enter the telecom tower business, a top company official said.
"PowerGrid is mulling over entering 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, said in Mumbai on Monday.
The company is also considering an option of leasing out towers to some of the existing players, he said, adding "…but everything is in the preliminary stage."
The company has mandated global consultancy firm KPMG to prepare a report, expected within a month, on the proposal.
PowerGrid owns over 1.5 lakh power transmission towers across the country, with almost 70 per cent of them located in semi-urban and rural areas, which can help it become the largest telecom tower company in India.
The official said that as the telecom companies are poised to launch 3G services that need higher tower density for better coverage, the prospects of PowerGrid in the new business are bright.
Based on the tenancy ratio, the telecom business can generate revenues of up to a few thousand crores, he said, adding that PowerGrid is in the process of assessing as to how many of its power transmission towers can be used for the telecom business.
"The valuation (of the proposed telecom towers) will vary based on different geographies," the official said.
PowerGrid diversified into the telecom sector four years ago, offering end-to-end leasing of optic fibre 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 optic fibre bandwidth customers of its telecom division that generates annual revenue of Rs 150 crore.
According to an analyst, if this move goes through, it may help the Government fix the PowerGrid FPO price band close to Rs 150. The shares of the company were traded at Rs 102 on Aug 13 at BSE.
Last month, the government decided to divest 10 per cent stake in PowerGrid by October, a move through which it could raise about Rs 8,400 crore.
The issue will comprise 10 per cent equity dilution by the government, and 10 per cent fresh equity by the company. The fresh capital raising will be used to part fund the PSU's investment requirement of about Rs 58,000 crore.