Telecom Towers and Tower Companies Consolidation in India – Indus Towers, Bharti Infratel, Reliance Infratel, Tata-Quippo, Aircel
By Manoj Govindassamy on 20 November, 2009, 7:13 am
Ever got frustrated with your mobile network’s poor signal quality ? Most likely, it could have happened when you traveled or moved away from town/city. As most of you know, mobile signal quality in a region depends on your Telecom Service Provider’s network infrastructure. Telecom Towers being the integral part of any mobile network infrastructure, have you ever wondered why your Telecom Provider have not installed enough Towers in every village and Highways in the country ? Read on to know more.
Telecom Towers are very expensive (each Tower is valued at 2 crores) to build and operate for any Telecom Providers in the country. Cost wise, they prefer to install and operate towers in high mobile density regions rather than in less populous regions. Since Towers need enormous investments, many companies have hived off tower business as its own entity. Nevertheless, small telecom companies are finding very difficult to own and operate towers.
The all-India tele density is around 45 percent, while the same is just 15 percent in rural India, implying a huge untapped market. The current rural ARPU (Average Return Per User) is estimated to be around Rs. 165. For an Operator, the lower per subscriber profitability and higher cost of reaching their customers justify the need for infrastructure sharing in the rural areas.
Good part of Telecom Towers are a single installed unit can be a home to multiple telecom providers. Mean, the same telecom tower can be used by multiple companies for distributing the signals. Companies have already started to share their infrastructure to bear with the tower investment pains. This business has outgrown exponentially and today there are independent companies to install and manage only the telecom towers.
As of March 31, 2009, there were approximately 2,60,000 Telecom Towers in the country. And, here is the split up of numbers :
A. 1,02,000 towers were owned by operator driven joint ventures
B. 75,000 were owned by tower companies set up by operators
C. 66,000 were owned by directly by operators
D. 19,000 were owned by independent tower companies.
But, market has changed a lot after March. There were more consolidations happening in the Telecom Towers Space. Quippo Telecom has acquired Spice Telecom’s tower business and Tata Teleservices Tower Business Unit is merged into it. American Tower Corp has acquired Xcel Telecom towers for 700 crores recently.
Indus Towers, a joint venture of Vodafone (42%), Bharti Airtel (42%) and IDEA (16%) is fast growing and already has more than 1,00,000 Towers up and running and claiming itself to be the World’s largest Tower company by installation units.
Reliance Telecom Infrastructure, the newly hived off telecom tower unit from Reliance communication is fast ramping up in Tower installation and sharing with other new players.
Meanwhile, one of the fastest growing mobile networks in India – Aircel, has planned to exit its tower infrastructure operations completely by selling it off to one of the Tower Infrastructure companies. GTL Infrastructure, Tata-Quippo and Bharti Infratel are in race to buy for around $2 billion.
BSNL has planned to lease its towers for better revenues. Because of the intense competition each tower needs more than 2 tenants to stay profitable. The current rates are a bit low and hence the sharing and consolidation.
There are few other small Telecom Tower companies like Essar Telecom Infra, Tower Vision, Aster Infrastructure, KEC International, India Telcom Infra etc.,. Larger Tower companies like Indus, Reliance Infratel and Bharti Infratel are planning to buy these small players. So, we can see more consolidation in this space.
Update: GTL buying Aircel Tower Business is confirmed.
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