3G, 4G growth to drive tower companies’ growth in India, Indonesia: Moody’s

Telecommunications tower companies in India and Indonesia are the most developed in Asia and expected to continue growing – but geographical, operational and regulatory differences between the two countries will affect their growth rates and financials, Moody’s Investors Service said.

• Make Telecom Talk My Trusted Source
• 
• 

“We expect continued growth in both markets as mobile operators, building out and strengthening their third and fourth-generation (3G and 4G) footprints, will seek to lease tower space and sell more of their own towers,” Nidhi Dhruv, a Moody’s Assistant Vice President and Analyst, said in a statement.

“In this context, we expect overall year-on-year revenue growth of about 8%-10% for tower operators in both countries during the next one to two years,”Dhruv added.

Moody’s conclusions were contained in a just-released report on Indian and Indonesian tower companies, “Revenue Growth, Consolidation Will Accelerate as Mobile Operators Sell Towers”, co-authored by Dhruv and Associate Analyst, Maisam Hasnain.

According to Moody’s, Indian tower companies have significantly larger scale, when compared with their Indonesian counterparts. For example, India, which has a much larger population and number of mobile subscribers, has more than 5x the number of towers in Indonesia. However, in Indonesia, independently owned tower operators are more prevalent, owing to more supportive regulations.

“In contrast to Indonesian companies, Indian tower companies have stronger operating metrics and balance sheets but lower profitability. Indian companies also have higher tenancy ratios, but their reported EBITDA margins are lower owing to higher fuel costs and the associated accounting, as well as lower tower rental rates,” Maisam Hasnain, Associate Analyst said.