Telecom Tenancy drivers and possible rollouts by anchor tenants

The Indian telecom industry is fragmented, and so is the tower industry, with most companies having preferred tower partners. The top three Indian operators have formed a JV to form Indus. However, Reliance Infratel, MTNL/BSNL, Tata, Aircel, among others, have their preferred companies, which will take a bulk of their tenancy. Therefore, Bharti Infratel / Indus Towers tenancy will have high dependence on the top three operators.

Factors that positively impact the future tenancy potential are 3G network Expansion, 2G tenancy for new entrants who make in-roads into rural areas and 900MHz Spectrum.

3G Network In most circles, operators holding

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Telecom CAPEX between Expansion and Maintenance

Telecom tower is a capex-intensive business. While the tower structure and shelter have a long life of up to 40 years, there are parts such as batteries, generators and air conditioners that are the responsibility of a tower company and have a shorter life. Telecom tower companies’ capex can be divided into new tower capex, tower capacity expansion capex, renewable energy initiatives capex and maintenance capex. For example, Bharti Infratel management has guided to maintenance capex of INR 100,000/tower per year. Main parts that need regular replacement are batteries (cost INR80,000-100,000 each) and diesel generators (INR150,000 each).

Indian tower companies spend on batteries and generators,

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Energy Cost Impact on Telecom Tower Companies

Telecom companies’ power cost has three components – grid power, batteries and diesel. Grid power is the cheapest source of power and is the main source in most urban sites. Telecom sites need upwards of 99% uptime, but round-the-clock grid power is not available for most towers. When grid power is not available, the cell site shifts to battery backup. In rural India, most sites either do not have grid connectivity or have grid power availability for a very short period, and grid and battery are not sufficient to provide the high uptime levels required for a cell site. Therefore, most of these sites run on diesel generators

Power and fuel cost is the single-largest cost head for a telecom operator (8-10% of revenue for the most efficient operators). Reading into the Balance sheet of Pure telecom Infratel Player,

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Tower Requirements of Top 4 Mobile Operators

Let us look into the Telecom Tower Requirement of Top 4 Operators – Airtel, Vodafone, Reliance Communications and Idea Cellular.

Bharti Airtel Airtel is already present on Bharti Infratel [BHIN] sites; will contribute to incremental tenancy of Indus Towers. Airtel is a tenant on almost all of Bharti Infratel’s towers. Airtel will contribute to Bharti Infratel’s incremental tower growth but not to its incremental tenancy. However, Airtel will be the key driver of 3G and 4G loading revenue, being the single-largest operator on Bharti Infratel’s towers. This benefit will be back-ended, as Bharti Infratel’s towers are in B and C circles, which shall see delayed 3G/4G investments, as they are predominantly rural

Vodafone India Vodafone is only on the 1,800MHz band, necessitating

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List of Telecom Tower Infrastructure Companies

I’d like to present the List of Telecom Tower Infrastructure Companies Operating in India

Aircel
American Tower Co India Ltd
Bharti Infratel
BSNL Telecom Tower Infrastructure
Essar Telecom (ETIPL)
GTL Infrastructure
HFCL Connect Infrastructure – Infotel Group
Idea Telecom Infrastructure
India Telecom Infra Ltd
Indus Towers Ltd

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Churn Declines Quality of Subscriber Base Improving

The churn level in the Indian Wireless Industry has started to decline sharply, in line with our expectations, driven by – Stricter subscriber verification norms set by the regulator in November 2012. Hike in the prices of SIM cards by distributors (as indicated by our checks) to cover up for the declining volumes, thus discouraging … Read more

2G /3G 4G Spectrum Allocation Map

There are 8-10 voice operators in India in most circles. In addition, there are four new operators holding the LTE spectrum in the 2.6GHz band. Top operators own 6.2-10MHz of 2G GSM spectrum and 5MHz of 3G spectrum, which is lower than that in most markets. India continues to see double-digit minute growth, and data … Read more

3G in 2100MHz Require Twice the Towers in 900MHz

Tower company contracts show that additional loading from the existing tenants leads to only a limited increase in rent, and this does not count as additional tenancy. However, a comparison of 2G and 3G spectrum holdings indicates that in most circles where operators have acquired 3G spectrum (2.1GHz), their existing 2G networks are on 900MHz, while 2.1GHz requires 1.9x sites to cover the same footprint.

Operators will focus only on loading their existing 2G sites with 3G over the next two-to-three years and will let subscribers move to an EDGE network in 3Gdark areas. However,

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Reliance Communications’ Tariff Hikes in Feb-2013

Along with incumbent GSM Lobby comprising of Airtel, Vodafone and Idea Reliance Communications has carefully hiked voice call tariffs in selected circles and not across India. The following chart shows the Tariff hikes by Reliance Communications in Feb-2013. What do you think of RCom’s Mobile QoS ? is it poor that it is unable to … Read more