Will $1-b BSNL outsourcing deal impact 30,000 jobs?

Bharat Sanchar Nigam (BSNL) is planning to outsource the management and maintenance of its towers and cable networks to compete more effectively with private players like Bharti Airtel and Reliance Communications, which dominate the booming industry and also unlock the value of its assets, reports the Economic Times.

The deal, which could be worth more than $1 billion (Rs. 5,000 crore) over the next five years, might receive stiff resistance from about three lakh employees as it will impact close to 30,000 jobs. "The company plans to train and redeploy a significant section of these employees to marketing roles," informed two executives requesting anonymity, as many employees are expected to be transferred to the IT firms that win the outsourcing deal.

Through this deal, BSNL will outsource more than 50,000 towers and over one lakh kilometers of optic fibre cable. "The telecom company is in process of finalizing tender conditions for inviting bids for the contract," said these executives.

"The move will help BSNL unlock the value from its towers and passive infrastructure as the once monopoly tries to play catch up with private rivals," said BK Syngal, Senior Principal, Dua Consulting.

"Successful bidders for this contract can share company's networks with private players for a fee and this could result in a revenue boost for BSNL," added Syngal, who is also a former Chairman of VSNL (now Tata Communications).

Reliance Communications had formed a joint venture with Franco American networks major Alcatel-Lucent last year and outsourced the management of its GSM and CDMA networks and infrastructure such as optic fibre cable in a deal worth $500 million over a five year period. The deal had crossed $750 million mark in July 2009.

Bharti Airtel also entered into a $500 million joint venture with Alcatel-Lucent to manage its landline and broadband business in April 2009. Around 4,000 Airtel employees were transferred to this new venture, which is a front runner to bag another $500 million contract from Airtel to manage and maintain its 80,000 kilometers intercity optic fibre cable network.

BSNL had recently postponed plans to hive off its towers and other related infrastructure into a separate company. The company felt it would be difficult to unlock value by merely hiving off its infrastructure and listing it due to falling valuations for the tower sector, said the executives.

Agencies/Economic Times