`

Feedback

Reader's Poll

Which of the following technologies/concepts are likely to witness significant traction this year?
 
Any data to show

Teledata

Tele Data

Mobile Subscribers Yearwise comparision

B.S. Shantharaju, CEO, Indus Towers

March 15, 2010



 -

Indus Towers, the largest tower company in the country, has coverage in 16 circles and a healthy tenancy ratio of 1.69, as well as a high speed-to-market. With new operators rolling out services, the tower company is on a high growth trajectory. In an interview with tele.net, B.S. Shantharaju, chief executive officer, Indus Towers, discusses the growth drivers, key issues and the road ahead for the telecom tower industry. Excerpts...

What are the key growth drivers for the telecom tower-sharing industry?

For a mobile operator, telecom infrastructure –­ towers and energy –­ accounts for about 50 per cent of the total cost. Site rollout, apart from being a time-consuming process, entails high costs. The infrastructure at a cell site typically consists of active components such as base transceiver stations, microwave, radio equipment, antennas and transceivers used for telecom signal processing and transmission; and passive components such as towers, shelter, airconditioning equipment, diesel electric generators, battery and electrical connections. Typically, the passive component accounts for 70-75 per cent of the cost of a site. With a marginal investment, the same passive component can be shared by two or more operators, thus resulting in optimum capital utilisation. The Department of Telecommunications has given a high priority to passive infrastructure sharing.

The key drivers for telecom tower sharing have been well understood by operators. There is substantial saving in capital and operational expenditure when a cell site is shared by two or three operators. This enables an operator to offer its services economically and preserve capital expenditure for future technologies such as 3G and broadband wireless access. Low teledensity and the exponential growth in subscriber base in rural and semi-urban areas require operators to implement economically viable telecom infrastructure.

Going forward, the low teledensity in the rural sector will act as a key growth driver. The introduction of 3G and Wi-Max will also drive growth for telecom tower companies.

What are the concerns that need to be tackled? What further steps should the government take to address these issues?

While the telecom infrastructure industry is still at a nascent stage in India, in the near future, a few billion dollars worth of investments are likely to be made. In order to provide a further impetus, the government should consider granting "infrastructure industry" status to tower companies and recognise the services rendered by them as "essential services"/"public utility services".The guidelines for the creation of telecom infrastructure and requirements of statutory permissions across the country should be standardised. The government should also allow tower companies to build active infrastructure for mobile operators, ease the process of obtaining no-objection certificates (NOCs) and lower the processing fee. The NOC fee should be determined on a cost-recovery basis rather than a revenue-raising proposition.

The government must play a strong facilitating role and actively work with the state governments to ensure that the procedures and overall approval processes are carried out smoothly. This industry generates a lot of jobs and a company may directly provide employment to 30,000-40,000 people. This industry has made an active economic impact and the government must ensure that various administrative fees are charged on a cost basis as opposed to a revenue-raising mechanism.

What is the current status of Indus Towers' tower portfolio?

We have in excess of 100,000 towers across 16 telecom circles.

What are your expansion plans? Do you intend to increase the level of investments?

Considering the low teledensity, the demand for passive telecom infrastructure in India will continue to grow at a healthy rate, at least over the medium term. This increased demand will be accompanied by greater sharing of infrastructure by the existing as well as new telecom players. 3G will need more capacity sites, mainly in the top 10 cities in the near future.

How do you compete with independent infrastructure players such as WTTIL-Quippo, GTL and ATC?

Indus, by virtue of its large size and widespread network, is uniquely positioned.We have the widest footprint and the largest customer base, which facilitate rollouts by mobile operators.

Do you expect more consolidation in the tower-sharing industry? What are the advantages of such consolidation?

Mobile operators need a strong and stable tower company to facilitate their rollout plans. This is a high-capital-intensive industry with a need to cut the gestation period. Hence, consolidation of smaller players is bound to happen.

A reasonable scale is a must to survive in this industry. Over a period of time, there will be only five-six players. The time-frame for this consolidation will depend on the amount of cash the players have to survive. In two years' time, we will see a lot of consolidation activity.

However, it is very difficult to predict what shape the consolidation is likely to take in the future.

How will the rollout of 3G and Wi-Max services impact the telecom tower industry?

3G and Wi-Max services are expected to further increase the demand for the sharing of telecom towers. The key success factor is speed-to-market, which can be facilitated by players like Indus. More towers will come up in the main cities.

What are the problems associated with setting up towers in rural areas?

Constructing telecom infrastructure in rural areas is challenging as there is a significantly higher capital expenditure involved as compared to urban and semi-urban areas. Fuel expenses substantially increase the operational expenses due to the lack of steady electricity supply in rural areas. Also, acquiring the permission to build telecom infrastructure on rural land is a challenge.

What are the international trends in telecom tower sharing?

Internationally, there are many successful companies such as the American Tower Corporation and Crown Castle in this space. Most of these companies have operations in developed countries, where mobile penetration has almost reached saturation levels. However, emerging markets such as India, Indonesia and Africa do have a lot of steam left for future growth.

Tower sharing is common in the US. To some extent, it has caught on in some parts of Europe as well, but it has not really taken off in other places apart from India.


 
 

To post comments, kindly login

 Your cart is empty

Ciena

cyber security

Monday morning