The Union Cabinet has approved a proposal to hive off Bharat Sanchar Nigam Limited’s (BSNL) telecom towers into a separate company with an aim to unlock value from the assets of the operator.

The Department of Telecommunications (DoT) will now constitute an inter-ministerial group, with representatives from the department of public enterprises, the department of pension and pensioner welfare and the department of economic affairs, to work out the capital and organisational structure of the new company. This will be done after a valuation of the tower assets is completed.

The decision to form a new company was taken since BSNL has failed to generate revenues from sharing the assets with other telecom service providers. The proposal was first submitted to a group of ministers in 2013. At that time, DoT had said that the total asset base of the new company would be around Rs 72.26 billion, with fixed assets of Rs 65.17 billion, without accounting for borrowings.