ICRA Expects Towers Merging With One Another To Remain Competitive

ICRA Expects Towers Merging With One Another To Remain CompetitiveIn the backdrop of Indian telecom sector’s phenomenal growth story, ICRA Ltd, expects that telecom tower industry in India will get consolidated with the smaller players either getting acquired by the larger ones or merging with one another to remain competitive.

However, the pace of consolidation would depend on the prevailing market conditions; pace of infrastructure rollout by the telcos, especially for 3G and BWA; and the financial flexibility of the larger tower companies, ICRA said.

India has witnessed significant growth in subscriber base over the last decade, with increasing network coverage and a competition-induced decline in tariffs playing facilitators.

The growth story and the potential have also served to attract newer players in the industry, with the result that the intensity of competition has kept increasing, forcing the telecom operators (telcos) to look for cost-cutting measures.

One such measure has been the hive-off of telecom tower related operations into separate companies to allow for greater operating efficiencies and tower sharing.

In ICRA’s view, telecom tower companies with a relatively large portfolio of towers offer certain clear advantages to telcos, including rapid rollout over a large area, and tenancy driven discounts.Further, large tower companies can access capital markets better to fund growth. These advantages make it somewhat difficult for the smaller tower companies to grow, thereby paving the path for consolidation in the industry.

So far, the telecom tower industry has witnessed some consolidation, including, among others, Quippo Telecom Infrastructure’s acquisition of Wireless Tata Tele Info Services, and Global Telecom Infrastructure’s acquisition of the tower assets of Aircel Cellular.

Despite the consolidation witnessed in the recent past, the telecom tower industry in India continues to be highly fragmented. Going forward, ICRA expects the trend of consolidation to continue and gain pace.The attractiveness of the telecom tower industry, given the aggressive network rollout plans of the telcos, has led to the entry of several companies in the fray.

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9 Comments on "ICRA Expects Towers Merging With One Another To Remain Competitive"

 

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Nikesh
February 18, 2011 11:50 pm 11:50 PM

@Saurabh
“On January 9, 2011, it was reported by an industry source that Docomo and Aircel agreed to jointly roll out 3G networks in the areas where they both have spectrum. This would be one of the first deals of network sharing in the Indian market. Nokia Siemens Networks is carrying out a pilot for Tata Docomo and Aircel in the state of Punjab.”

Source:- http://en.wikipedia.org/wiki/Tata_Docomo

Anil
February 18, 2011 11:40 pm 11:40 PM
Hi Bro you forgot to mention India’s Giant Infra Co. i.e. Indus Towers a joint venture of Vodafone(42%), Bharti Airtel(42%) and IDEA (16%) is formed & owned of more than 80,000 cellsites in India. 13 Telecom tower companies in India By Sriram Vadlamani May 04, 2009 12:00AM UTC 382 Comments and 1 Reaction Telecom towers are the integral part of the telecom network infrastructure. In fact they are the most expensive to build and the valuations are heavy. The business has outgrown itself that most of the companies have hived off the tower business as its own entity. Tower business… Read more »
firstonnet
February 18, 2011 11:19 pm 11:19 PM

13 Telecom tower companies in India
Indus 80000 nos (Ortus Infratel Holding (Vodafone – 42%) + Bhart Airtel (42%) + IDEA (16%))
Reliance Infratel 31000
Bharti Infratel 20000
Quippo Telecom Infrastructure (QTIL) 23000
GTL 9000
Essar Telecom 6000
American Tower Corp 4000
Tower Vision 3000
Aster Infrastructure 1000
India Telecom Infra Limited 1000
KEC International 400
Independent Mobile Infrastructure 400nos

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.

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