Bharti Infratel Tenancy Sluggish, Reliance Jio’s Light Weight Towers

Bharti Infratel Growth SluggishBharti Infratel saw reduction in tenancies currently as the smaller operators are exiting the market. There was a reduction of 1,179 tenancies in this quarter due to such smaller operator exits (Largely Videocon’s Exit). But even excluding the impact of such exits, gross tenancy addition of 2,546 is muted vs the prior four-quarter tenancy addition of 3,185. This suggests that even the Big 3 (Airtel, Vodafone, Idea) have been slow in rolling out tenancies/towers in this quarter, in part seasonal and in part due to the nearness of the upcoming spectrum auctions.

Strong loading on existing sites has led to a ~3% Y/Y increase in average rentals (~Rs 35,039 for Jun-16). Almost all 3G/4G build-out by operators (more…)

How Bharti Infratel Grows & Makes Money ?

Bharti Infratel GrowthIndus Telecom Towers and Bharti Infratel together constitute 38% of the total tower portfolio in India.

Telecom Tower Tenancy & Demand
Bharti Infratel suggests that a vast majority of its tower have two tenants. c40% of BIL’s towers have single tenant. Management highlights that the company has one of the best quality tenants. BIL’s top three customers contribute to 85% of its revenues and tenancies. The company also suggests that the top three customers have more loading. Bharti Infratel is not building new towers for Reliance Jio (RJio), which typically comes in only as the second or third tenant on their towers. RJio has started impacting BIL’s financials only in the last two quarters.

Management suggests that further growth (more…)

Bharti Infratel Riding Reliance Jio Network Expansion

Bharti Infratel TowersBharti Infratel [Telecom Tower & Infrastructure Company] together with Indus towers, has been gaining market share. Bulk of tenancy additions during the quarter came from data networks (by definition, this excludes the 3G loading sites which do not contribute to the tenancy number). This suggests that a decent amount of new 3G/4G site demand is coming up already (as against the expectation of 3G loading continuing on existing 2G locations continuing). Reliance Jio contributed significantly to qoq surge in additions reported by Bharti Infratel standalone [agreement with Indus signed end of 2Q]. However, strong 2Q volume growth did not translate into commensurate rev growth given late quarter tenancy pick up.

Bharti Infratel Fiber Backhaul
Mgmt said that Under its current IP-1 license, BIL / Indus are allowed to deploy only dark fiber, but to run active fiber business, it would have to come under current licensing regime that would result in 8% license fee payment to government. The differences between tower business and fibre business in terms of the pace of technological change, duration of contracts and pricing, that have forced the company to deliberate more on fibre business opportunity. Mgmt. acknowledged the need for fibre in the country given expected data growth, and therefore it would be looking at this opportunity much more (more…)

Bharti Infratel to Ride on Incremental 3G /4G Tenancies

Bharti Infratel 3G 4G TenancyThe nature of growth in the tower industry has undergone a substantial change, reflecting the change in maturity, structure and growth drivers of the mobile telecom sector. The coverage of key mobile operators is now more or less complete. The focus is now on augmenting voice capacity and data coverage. As a consequence, the tower industry growth is being driven more by increase in tenancies than through new tower additions.

According to Bharti Infratel management most 3G sites are co-located with 2G sites and over
time, as data grows, standalone 3G sites would drive (more…)

Status of Indus Towers / Bharti Infratel – Tower Business

Telecom Towere Business IndiaThere is a Potential of Listing Indus Telecom Tower Company separately on the Stock Exchanges as it could help its owners, Bharti Infratel and Idea, raise money to repay Indus’ debt, providing more cushion for spectrum renewal and upcoming auctions (like 700 MHz).

Indus is a subsidiary of Bharti Infratel (already listed), and as a consequence, there is already a market ascribed value for Indus. Bharti Infratel stock price has fallen 32% from Rs 220 (IPO price on 28 Dec-12) to Rs 150.9 (yesterday’s close), and therefore the market implied value for Indus would have also declined, making current valuations inexpensive vs. tower-cos peers. We therefore remain uncertain on the timing of such an IPO

Smaller telcos continue to selectively close operations which will impact tenancies of tower companies. However, we expect limited impact on Bharti Infratel as majority of tenancies (more…)