While the Indian telecom service operators are concerned over high spectrum pricing, free roaming and other issues, the telecom tower players have some reasons to cheer about, as surging penetration of mobile subscribers and the roll-out of 3G and 4G networks offer them enormous opportunity to flourish in the country.
Despite the introduction of 3G and 4G technologies in the country, second generation (2G) telecom services are here to stay with untapped penetration in the rural market. At present, the rural wireless subscribers stands at only 36.68 percent, representing huge untapped potential for both service operators and telecom tower companies. According to a report by Analysys Mason, 2G base stations, which are currently installed on 3,76,000 towers in the country are likely to surge to 4,20,000 by 2017.
It is expected that the future deployment of towers will not based on proactive deployment, rather be demand driven. While 2G coverage will surge in tier 2, tier 3 cities and rural areas, the tenancies are expected to be driven by 3G capacity and 4G coverage with capability in later years.
The enormous potential for the tower business can be found in the latest IPO of Bharti Infratel, which is the telecom tower wing of Bharti Group. Bharti Infratel is raising money from the market through the initial public offer (IPO) of 188,900,000 equity shares of face value of Rs. 10 each share. Akhil Gupta, deputy group CEO and managing director of Bharti Enterprises said that, whether 2G network increase or 3G/ 4G networks surge, telecom tower will always get business. He also added that, the tower companies are in a position of profitability and will remain profitable due to network roll outs and network expansions.
The Analysys Mason report stated that the present coverage of 3G will remain focused on select cities, but telcos are expected to roll out 3G networks in tier II and tier III cities in the next two years. The market research firm expects 3G coverage will reach villages with a population of greater than 5,000 after a few years, amounting to about 19,000 villages in total.
Both Analysys Mason report and Akhil Gupta reiterated that, the sharing of towers will ease pressure for the telecom service providers. The rise in number of sharing operators on a tower increases will certainly result in better economics for tower companies. Sharing of towers will allow telecom tower companies to generate incremental revenue while incurring inappropriate incremental capital expenditure.
The main telecom tower companies in India are Bharti Infratel, Reliance Infratel, Viom Networks, GTL Infra, ATC, Tower Vision, and Ascend Telecom. As of March 31, 2012, Bharti Infratel operates 80,000 towers along with Indus, Reliance Infratel operates 50,000 towers, Viom Networks operates 42,000 towers and GTL Infra operates 33,000 towers, ATC manages 10,000 towers and Tower Vision runs 8,000 towers.
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