The telecom tower industry is set to get a big boost in the wake of introduction of 4G by Reliance Jio and expansion of 3G technologies.
According to a study by KPMG in association with trade body Assocham, the telecom tower industry’s tenancy ratios will increase to 2.9% by March 2020 from 1.95% as on March 2015. Tenancy ratio means the number of tenants or operators who have put up their antennae and other active infrastructure on the towers.
India has emerged as a big player in the tower infrastructure sector in the past few years. There are about 4 lakh towers in the country, and 70% of them are owned and operated by tower companies. The survey says that the advent of new technologies like 4G and expansion of 3G technologies in rural areas will give a massive fillip to the telecom infrastructure industry in the next five years. Due to the rapid growth in this sector, tower companies have invested in a big way in the last few years. The aggregate capex spending increased from Rs 8,000 crore in 2013-14 to Rs 10,200 crore in 2014.
According to the study, “India has been the most preferred destination for investment in the tower sector in Asia.” Since 2008, seven out of the top 20 deals in Asia in the tower sector have originated in India. Deals worth Rs 40,367 crore were finalised during this period, it says. The study also talks about the challenges the telecom tower companies are facing. “They are facing multiple fees and levies, The applicable fee structures vary across states and local bodies. In addition to this, deposits and bank guarantees are also required for tower installation in some geographies.
Assocham secretary general D.S. Rawat said that continuous power supply to tower companies is very critical. “If there is power shortage, it will lead to increased diesel consumption, which will increase the operating costs. These companies also face problems in getting power connections,” Rawat said, adding “it is very important for the government to provide electricity connections on priority”. Telecom service providers together earned Rs 177,500 crore in revenue in 2014-2015, which is up from Rs 146,700 crore in 2012-13. India has become the second largest mobile market with over a billion subscribers at the end of February 2016. The overall telecom density has also increased to 82.9% by the end of February 2016.