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Telecom tower industry needs massive investment of Rs 20,000 cr

Industry needs at least 100,000 towers in near future as it makes stride towards new technologies including 5G

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India's tower industry requires a massive investment of Rs 20,000 crore in the next few years to keep pace with the burgeoning growth in data on mobile and advent of new technologies.

The industry needs at least 100,000 towers in near future as it makes a stride towards new technologies including 5G, artificial intelligence, internet of things. Not to forget, the need for constant expansion in 4G mobile services.

Currently, the industry has 471,000 towers across the country with 18.5 lakh BTSs installed over these towers while the total subscriber base stands at around 1.1 billion.

A senior executive of a tower firm says as the mobile industry started consolidating, the incremental business from new/small operators came down. And with the merger of Vodafone and Idea Cellular nearing completion, the tenancy ratio will take a hit again impacting the margins at a time when a business has slowed down due to exit of smaller players and diesel prices are on a rise.

On a conservative estimate, the industry requires about 100,000 towers, though the actual need is much higher, the executive said, adding setting up of one tower costs roughly about Rs 20 lakh.

The tower industry felt the ripples with the entry of a new player Reliance Jio which shook the mobile industry as well as allied ones alike. As the telecom market moved towards consolidation, the tenancy ratio (number of tenants/operators sharing a tower or a site) came down significantly triggering consolidation in tower industry alongside.

Bharti Infratel-Indus Towers announced a merger in April this year, while US tower firm ATC has acquired independent tower business of Vodafone India and Idea Cellular separately. BSNL is the other major entity with a substantial number of towers and is looking to divest its tower assets. In the mobile market, the industry is left with three players – Bharti Airtel, Vodafone-Idea combine and Reliance Jio plus a telecom PSU BSNL/MTNL.

Tilak Raj Dua, director general, TAIPA (towers and infrastructure providers association) says, "The country is set to witness a multi-fold growth of data which will necessitate the installing of around 100,000 mobile towers across the country in the near future."

Along with towers, the telecom players have been enhancing the network coverage through in-building solutions, fiberisation of backhaul communication networks. Besides, deployment methods such as street furniture, small cells, PICO Cells and FEMTO Cells solutions are also being deployed by telecom operators which will enable connectivity and futuristic technologies, Dua said.

Despite the consolidation, the growth in data traffic and volume is manifold. A Crisil Research report says mobile data consumption in India is expected to multiply four-fold in the next five years through fiscal 2022, given low penetration and an expected doubling of data subscribers to more than 900 million.

By 2022, mobile data subscriber penetration in India will reach 80% from less than 40% currently. Between fiscals 2012 and 2017, India's mobile data usage per subscriber climbed to around 80% annually to around 1.25 GB per month on increasing adoption of 3G and 4G services, free data offered by Reliance Jio, and a sharp fall in tariffs at 40 % in the past fiscal alone.

Going forward, fiberisation of mobile towers is the need of the hour. US, China and Japan have more than 80% of mobile towers fiberised while in India the percentage is close 20% only, according to experts.

However, the tower industry has many challenges in setting up towers which include issues with RoW, difficulty in new site acquisitions, lack of single window clearance and others. Since the issue of call drops, the telecom department has been working on with many other departments to ease setting up of telecom infrastructure by operators.

...& ANALYSIS

  • Industry needs at least 100,000 towers in near future as it makes stride towards new technologies including 5G
     
  • Data consumption in India is expected to multiply four-fold in the next five years through fiscal 2022
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