Summit Digitel, India’s second largest independent towerco, has taken major strides in terms of expanding its digital outreach during the past year. The company is now gearing up for the 5G era and has the most fiberised tower portfolio in the country. In an interview with tele.net, Dhananjay Joshi, managing director and chief executive officer, Summit Digitel, talks about the company’s operational and business highlights during 2021, new revenue drivers and future plans….
How has been Summit Digitel’s journey in the Indian telecom space so far?
Our company was established in September 2020. Within a very short span of time, we have grown to becoming the second-largest tower company in India, with operations throughout the country. Having over 151,000 towers, a unique portfolio that allows for nationwide 4G coverage, along with a willingness to adapt several new technologies, including 5G roll-out, we are well-positioned. Among peers, we have the youngest and most fiberised tower portfolio and the lowest operating expenses per tenant. With a derisked tower business model and a long-term service agreement, we guarantee excellent revenue visibility.
Our focus on consolidating and enhancing our portfolio during the last year has been characterised by both a high-level focus on financial performance and efforts to build-up organisational culture. With our vision of “sharing happiness by enabling connections” and our mission of “being the most preferred digital infrastructure provider, offering end-to-end innovative solutions in a sustainable manner”, we have set foot in the industry with the right intentions and ambition. We place a high value on safety, respect, entrepreneurial mindset and excellence as our core values.
To demonstrate this commitment, we have developed the Summit Safety Scorecard Programme across the country, which will enable us to quantify and measure the effectiveness of our safety initiatives.
What were the key business and operational highlights for the company during 2021? What were some of the initiatives taken by you during the year?
While this was a challenging year for the economy, Summit Digitel had many successes to celebrate. As a result of our collaboration with nearly all the leading mobile network operators in the country, we plan to strengthen our existing relationships, while creating new ones. Owing to our unique contracting features, we have been able to achieve nearly 100 per cent service uptime and established cost certainty through several premium-quality features. Summit Digitel also focuses on the right combination of capabilities and business opportunities, ensuring that it is well positioned to take part in the next technological revolution.
How has India’s 5G ecosystem evolved during the past year? What role are towercos playing in this regard?
The roll-out of 5G in the country is the latest exciting development in the telecommunications sector. 5G was first brought to the forefront in India in 2017, when the government set up a high-level forum to lay out the roadmap for rolling out 5G in the country by 2020. Over time, many companies have participated in the 5G forum, conducting major trials and contributing to the development of a 5G framework.
A 5G network’s flexibility provides tower companies with the ability to offer networks as a service with customised offerings and provide select functions to certain market segments, resulting in greater efficiency and more rapid time to market in the end. As new business models are emerging for tower companies, many companies are turning their attention away from the macro tower model to fibre and small cells, wireless, smart cities and beyond. Tower operators are now in a good position to innovate, explore opportunities and adopt new business models in order to achieve the targets under the National Broadband Mission and achieve the goal of universal broadband and fibre connectivity across the country.
What are the new revenue drivers and opportunities that you are looking at?
In the coming decade, internet of things (IoT) will play a crucial role in redefining the country’s communications landscape. Augmented reality and virtual reality, along with 5G, will play a crucial role here.
In the near future, macro sites may receive modest growth due to capacity expansions that will be required to accommodate the latest data and 4G services, followed by the launch of 5G services in the next couple of years. Growth in the sector may result in new revenue streams derived from the capitalisation of real estate rights with infrastructure providers, possibly generating growth in advertising, electric vehicle (EV) infrastructure, security solutions, traffic control, etc. Many infrastructure players have already begun exploring new opportunities by diversifying into fibre, smart cities and small cells. In fact, I do consider that it is both important and practical to use street furniture in developing digital infrastructure. Also, it is essential that in order to implement the right-of-way (RoW) policies, different governments must conform to RoW standards so that a single interface can be established, which can be accessed by everyone.
The capability of maintaining simultaneous connections at low latency will dramatically increase IoT deployments and ensure additional revenue opportunities for communication service providers (CSPs). A greater amount of bandwidth also provides CSPs with the opportunity to partner with over-the-top players to provide HD content. As part of our power management initiative, assess the potential for establishing EV charging stations.
What are the key challenges faced by your company? How do you plan to address these?
Even with all the external challenges that we have faced in the past year, we have still made considerable progress. Although the pandemic has slowed down some processes, including the establishment of new systems, it has not hindered our operations. Our strategy is to pay a lot of attention to the opportunity of growth and the process of negotiating, in order to overcome challenges.
What is your outlook for the Indian telecom tower industry for the next few years?
I am optimistic about the Indian telecom tower industry, especially in the next few years. Towers are expected to grow at over 6 per cent compound annual growth rate in India, with an attractive growth opportunity. Mobile subscriptions and fixed broadband subscribers will drive the telecom sector growth in the coming years, especially until 2026. In addition, we would like to examine non-tower revenue sources so as to diversify our revenue stream.
It is apparent that there is a need for fiberised towers that can lead to increased tenancy opportunities. We are also anticipating the introduction of government policies that will facilitate sharing of infrastructural resources, such as the creation of a National Fibre Authority. Further, the 5G roll-out after 2022 will result in a huge demand for tenancies.
Tower companies can enter the territory of fibre deployment, small cell and edge computing as it advances its capex to opex model. In order to create robust telecom infrastructure and to implement the Digital India agenda, it is imperative that the ease of doing business is a priority.
The National Digital Communications Policy 2018 intends to facilitate shared active infrastructure through the enhancement of the scope of infrastructure providers, as well as encouraging and incentivising deployment of a common, sharable, passive infrastructure as well as an active infrastructure. A policy support programme for shared digital infrastructure providers can be highly effective in accelerating India’s goal of digital expansion. Additionally, incentives for tower construction and accelerated permissions for roaming telecom towers can facilitate the expansion of telecom infrastructure.
What will be Summit Digitel’s growth plans and focus areas during 2022?
Optimally, we intend to build a strong forecast on mobile data traffic growth so that the expansion of 4G coverage and capacity will drive the demand for tower infrastructure. On top of that, low population coverage by incumbent operators will also be a benefit in our favour. In the long run, Summit stands to reap the riches due to its unique portfolio attributes, scale, location and the predominance of ground-based towers that can accommodate multiple tenants at the same time. We see high visibility and high certainty for revenue and earnings before interest, taxes, depreciation and amortisation in the future, driven by the long-term MSA (master-service agreement) and expansion of our sites.
The construction of new tower sites will not be a speculative endeavour since our business model is based on “build-to-suit”. We are hoping to implement a “Fibre First Initiative” to make it easier to bring fibre-to-the–home to businesses and institutions. To support the digital infrastructure that will serve as the backbone of smart cities, towercos and Summit are well positioned to create and maintain the digital infrastructure to make that possible. During this process, we will be working towards enabling end-to-end services, providing users with a consistent network experience, strengthening our operational and maintenance capabilities, and improving our life cycle management capabilities.