Indian telecom operators’ aggressive 3G and 4G network deployment will help towers firms increase the mobile tower tenancy ratio to 2.9 times by March 2020 from 1.95 times as of March 2015, according to a study conducted by ASSOCHAM-KPMG.
The increase in tenancy ratio has been the key growth driver for tower companies in India, the industry group said.
ASSOCHAM said that the growth in telecom sector has helped the country emerge as a trendsetter in the tower infrastructure segment.
The industry group said that the advent of technology like 4G together with expansion in the rural areas will be key drivers for the telecom infrastructure industry over the next five years.
It said that the rapid growth, fuelled by expansion in the sector has prompted tower companies to commit heavily on capital expenditures.
“India has been the most preferred destination for investment in the tower sector in the Asia. Since 2008, seven out of the top 20 deals in Asia in tower sector have originated in India. More than 84,000 towers have exchanged hands in India since 2008 which represent 84% of the total towers sold in top 20 deals in whole of Asia during the period. Deals amounting to Rs 40,367 crore have been finalized during this period,” Sunil Kanoria President ASSOCHAM said.
Currently around 3 lakh out of more than 4 lakh mobile towers in India are owned and operated by tower firms that include ATC, Bharti Infratel and Indus Towers.
According to ASSOCHAM, the aggregate capex spend increased from Rs 8,000 crore in 2013-14 to Rs 10,200 crore in 2014-15. Net tower additions were also significantly higher at about 6,300 in 2014-15 from 3,200 in 2013-14. 15% of the total capex spends were incurred by towers running on green energy.
The telecom tower companies’ currently face challenges such as obtaining electricity connections, especially in rural and remote areas, and lack of grid supply, which it believes is critical for smoother connectivity.
The telecom department guidelines for tower installation stipulates only a one-time fee which the states may levy to recover administrative costs for issuing the permission, should be uniformly implemented across states, the report added.