B.S. Shantharaju, Chief Executive Officer, Indus Towers
The telecom sector has played a major role in enhancing the GDP of the country. If the GDP has witnessed a compound annual growth rate of about 8 per cent in the past six years, the telecom sector has contributed 3-4 per cent.
Despite witnessing significant private investments, the industry continues to face several challenges. The absence of reliable power is the biggest concern, which also impacts the operating costs of tower companies.
Ensuring steady power supply is critical in areas that witness outages of 8-16 hours in order to offer operators 99.95 per cent network uptime. This involves a large dependence on diesel use, which has an adverse impact on the environment. The regulator and the government need to play a bigger role to mitigate this impact. The Telecom Regulatory Authority of India has taken steps in this direction by issuing guidelines on green telecom.
However, the regulator should let the operators achieve the targets set under the guidelines with minimal interference.
Globally, regulators and governments set targets for operators; they do not direct them on the means to achieve these targets.
As the largest tower operator in the country, we have initiated steps to increase our green footprint. We have reduced our diesel consumption by 18 per cent in the past 24 months despite 20 per cent business growth. We have reduced diesel usage by 20 per cent in the Uttar Pradesh circle and by 12-13 per cent in the southern circles.
The government should set targets in terms of percentage per unit to further reduce our diesel consumption over a defined time frame. However, selection of the route for achieving these targets should be left to the tower company. In fact, all players in the telecom tower space should collaborate to achieve these goals.
It is also important to ensure that these goals are economically viable for tower companies in the long run. While the government may offer subsidy as the first step, this is not sustainable in the long term. Therefore, tower companies will have to implement a mechanism that works on a long-term basis.
Minimising costs is another issue. Currently, all telecom operators are facing challenges related to cash flow. In this situation, every tower company?s goal is to offer economical services to operators. To achieve this, tower companies should experiment with cost saving solutions in collaboration with two or three operators and, if successful, expand the customer base.
Also, to minimise costs, tower companies need to identify an appropriate economic model for their business. There are capex limitations, but operators still want to innovate. The tower companies must be willing to sign long-term partnerships of at least 8-12 years with an operator. This will be important for all parties in the long term. If tower companies do not identify an appropriate financial model, they are not likely to be able to expand their business. In this context, the renewable energy service company (resco) model is the most viable solution. We need to aggregate the demand in a particular area and allow the resco party to scale up operations.
However, implementing the resco model entails several challenges. Various factors need to be examined, such as metering for the resco and selection of a prepaid or post-paid business model.
In terms of technologies, any battery-based solution is viable for the tower industry. We believe that the technology for batteries will improve significantly. This will be important for tower companies as energy related costs are one of the major capex components.
To illustrate the effectiveness of such a solution, we launched the Green City programme over a year ago with the aim of ensuring diesel-free operations at 15,000 of our tower sites. Today, we run 11,800 towers without diesel and our target is 20,000 such sites by March 2013.
Going forward, several other factors will have to be considered to make more telecom tower sites diesel free. One of the key factors is achieving an improvement in battery cost and efficiency.
We are interested in using solar power and currently have 892 towers running on this technology, but we are yet to test its economic viability. The resco model will help us in deploying solar power solutions. Solar energy is a viable option as the price of photovoltaic cells is reducing.
Another upcoming trend in the tower space is active infrastructure sharing. It has already begun on a small scale (through roaming agreements) and is set to gain momentum in the future. Over a period of time, a different model of active infrastructure sharing is expected to emerge.
