Bharti Infratel CEO on Future of Telecom Infrastructure Services in India

DS Rawat, CEO, Bharti Infratel Limited in an exclusive Interview answers Questions on the Future of Telecom Infrastructure Services in India.

What have been the key trends in the telecom tower space in India over the past two years?
Wireless telecommunication in India has witnessed rapid growth and is likely to see more traction with the advent of services based on next-generation technologies. Telecom operators across the industry have realized the importance of passive infrastructure sharing, which implies robust opportunities for the tower industry in the long term. The past year saw a slowdown because of the import restrictions on BTS equipment and also the high auction prices for 3G and BWA, which made mobile operators adopt a cautious approach toward their network rollout plans. 2011 is expected to witness stable growth on account of next-generation technologies driving the demand for data services and expansion in rural areas.

What is impact on the tower industry due to rural expansion?
Setting up telecommunication infrastructure in rural areas involves significantly higher capital expenditure as compared to urban or semi-urban areas. At present, the leading operators have a well-entrenched network across areas where population is in excess of 5,000. However, these operators are not very keen to expand beyond these because most of such areas because the return may not be feasible in terms of the investment. Operational expenditure is the primary cause of concern in these areas, because
such areas have low or no grid power availability, compelling operators and tower companies to rely heavily on diesel or use alternate sources of energy, which are expensive propositions.

Do you think that the current market trends are driving the tower companies to shift their focus from building new assets to tenancy?
For Bharti Infratel, the scale has been achieved in terms of the number of towers and for us, this has been the core underlying principle from day one.
As the concept of passive infrastructure sharing gains traction, the tower industry leaders are likely to shift focus toward enhancing tenancy levels and augmenting revenues. We believe that the key performance indicator going forward would be revenue per tower.

What are the key challenges faced by the tower sector?
The telecom infrastructure industry is facing several roadblocks at the moment. The lack of a clear policy framework for approval of towers and right-of-way constraints has been adding to the woes of the telecom tower companies. The industry is awaiting the infrastructure industry recognition, such that the services rendered by them are recognized as critical and these tower companies are provided with improved grid power connectivity, especially in rural areas. The industry players have also been awaiting the support of the universal service obligation fund to erect towers in rural and low-penetrated areas.

What further steps should the Government take to address these roadblocks?
The Government should work at granting the infrastructure industry status to the telecom tower industry. The DoT should direct all state governments to provide priority 24×7 grid power connectivity for telecom tower sites, to ensure uninterrupted power supply and reduce or eliminate diesel consumption and, as a result, reduce carbon emissions as well. The tower industry is constantly seeking government support to incur research and development expenditure to transition toward greener technologies. Basically, the Government should look at providing direct as well as indirect support because the tower industry, which forms the backbone of the telecommunication services, has now become a necessity such as water, electricity or roads.

How do you see the tower industry evolving in terms of towers and tenancies in the next three to five years?
In the short term, 2G and 3G will result in additional tenancies. 3G and next-generation technologies are likely to add additional towers, once the Indian wireless market begins to see significant revenues coming from data services. For Bharti Infratel, the growth will be rather stable, because we already have the technology and infrastructure in place. The focus will eventually shift toward upgrading technologies and enhancing tenancies.

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