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, which are the key elements of recurring capex. We estimate maintenance capex to sales at 8% of total revenue and 13% of rental revenue. When a new tenant is added, a tower company typically spends up to INR0.3m to increase battery and generator capacities and to strengthen the tower structure to take on additional load. We understand that, unlike global tower companies, Indian tower companies do not necessarily have separate shelters for new
tenants.
Key capex heads for tower company
Construction and tower cost, which is typically around half of the capital cost for a ground-based tower (GBT) and around 20% for a roof-top tower (RTT). Cost of related equipment such as shelters, air conditioners, diesel generators, batteries and electrical
works (power interface units, switched-mode power supply and cabling charges).
1 thought on “Telecom CAPEX between Expansion and Maintenance”
Comments are closed.