The telecom market in India had been a “tough” space for the operators in the past two to three years, says Tom Bartlett, chief executive officer at American Tower. Bartlett said that American Tower witnessed “outsized net growth” when the company “originally” entered the Indian telecom market. However, the chief executive officer at American Tower said that the growth was “clamped down” as the Indian telecom market underwent “consolidation” and went “through some of the regulatory patch issues.” Bartlett said that the measures taken by the Union government in the past 10 days provide a “great backdrop” for the telecom industry and that “it’s a case of being patient.”
Government Measures Very Helpful: ATC CEO
The Union government in mid-September announced a set of “structural and process reforms” for the telecom industry to “promote healthy competition” and to “generate employment opportunities.” The measures announced by the Union government included a four-year moratorium for the telecom operators to repay dues to the government along with the revised definition of adjusted gross revenues.
“The issue for our largest customer in India has been one of available cash to be able to reinvest into their networks,” Bartlett said in the annual Goldman Sachs Communacopia Conference on Wednesday.
The chief executive officer at American Tower highlighted that the telecom operators have a “significant amount of debt” and that “most of it is to the government.” Bartlett said that the measures taken by the Union government in the past 10 days will be “very helpful.”
“We're hopeful that it will now give Vodafone some more air in their tires to be able to turn around and continue to, or increase the overall investment that they have in the marketplace,” Bartlett said.
American Tower is said to own and operate over 76,000 sites across India with Bharti Airtel, Vodafone Idea and Reliance all said to be engaged with the company.
“I think Airtel and RJio (Reliance Jio) are going to continue to invest heavily in the market,” Bartlett said. “It's a big market. They have a new spectrum in the marketplace. My sense is that they'll have a more new spectrum in the marketplace. They'll have more flexibility in terms of how to use it.”
ATC CEO “cautiously optimistic” About Indian Telecom Market
Bartlett highlighted that the government is now extending the spectrum licenses and that it offers the telecom operators “more comfort on rolling out infrastructure within each one of those bands.”
Crucially, Bartlett said that American Tower still witnesses “good” gross additions “just because of the dynamics of how many people are there and what's being deployed” by the telecom operators in India.
“I'm hopeful that a lot of that churn is going to be largely behind us and that now all of the customers there, including BSNL, which is the government-owned largely venture, are going to now be able to turn the spigots on and start to reinvest back into the market,” Bartlett said.
The chief executive officer at American Tower is “cautiously optimistic” about the telecom market in India. Further, Bartlett thinks that the American Tower will be “able to get back up into those mid-single-digit types of growth rates in the not-too-distant future."
“We're really hopeful as a result of the government kind of stepping up and maybe there's even going to be an opportunity for some price increases in the marketplace to give the carriers a little bit more flexibility in terms of what they do,” Bartlett said.
Meanwhile, ICICI Securities, a subsidiary of ICICI Bank said that Vodafone Idea “does not need much of cell site addition” but that the operator “needs to expand” its 4G base transceiver stations. The firm in a note on Wednesday said that Vodafone Idea has 21% lower 2G cell sites as compared to Bharti Airtel and also 31% lower mobile broadband cell sites. Further, ICICI Securities said that Vodafone Idea had 48% lower mobile broadband base transceiver stations (BTS) as compared to Bharti Airtel as of the first quarter of the current financial year.
“VIL (Vodafone Idea) still has a long way to go as it needs tariff hike and recouping of some market share,” ICICI Securities said. “We expect VIL to use capital to accelerate its capex in 4G where it lags peers in terms of data capacity though it always enjoyed a huge advantage on spectrum quantity.”
