Telecom operators complain that a paucity of telecom towers and inadequate spectrum hinders the quality of voice and data services in the country. But tower companies don't seem to be complaining. Policy measure set in place over two years, an insatiable demand for data and an overall positive interest by international financial investors on the prospects of telecom in India are contributing to a boom-time in the industry.
Bharti Infratel, India's only listed telecom tower operator, Friday said its net profit rose 25 per cent on year, as mobile phone operators invested in expanding 3G networks and rolling out 4G infrastructure. This comes close on the heels of an earlier announcement this week that American Tower Corporation (ATC), a New York Stock Exchange-listed mobile infrastructure company, acquired a 51 per cent stake in Viom Networks for a cash consideration of Rs 7,635 crore. The deal is seen as the beginning of a consolidation in the sector before a second wave of growth kicks in.
Consulting firm Deloitte's Hemant Joshi told Business Standard that the story of ATC, which has a market capitalisation of $40 billion and an enterprise value of $55 billion, is perhaps indicative of an exciting phase for Indian tower companies. He added that the deal was a win-win for all parties, as it allows several investors to exit in favour of a single entity and would lead the company to its next wave of growth.
The Financial Express said last month that the lack of mobile towers has been the main reason behind call drops and the government has taken a policy decision where all government buildings must allow installation of towers. Telecom minister Ravi Shankar Prasad has also written letters to CMs to facilitate this. Telecom companies have complained, according to the paper, that about 7,000 to 10,000 tower sites have been locked or shut down across major urban centres and have urged a national policy for installation of mobile owners.
Prospects for tower operators have improved since 2012 when mobile phone companies scaled down operations or had their licences cancelled by the Supreme Court. Competition has eased, allowing telcos to improve cash flows that can be invested on expanding and upgrading networks. Tower companies are also signing up operators for the rollout of 4G networks. ET had first reported on May 6 that RCom is looking to sell a majority stake in Reliance Infratel, the country's No. 3 tower company, to focus on core operations and pare debt.
The increased attention that telecom-tower managers are fostering on upgrading their infrastructure is also leading to whacky idea being tested, in terms of improved designs and unconventional placing strategies, to improve network coverage. The Financial Express reported that to check call drops, the country’s largest tower company Indus Towers is conemplating installing street level towers, which are being placed on streetlight poles across cities and towns wherever there is an issue of network congestion.
Indus Towers CEO BS Shantharaju told FE that they have already started a pilot project in Coimbatore in Tamil Nadu, where street level towers have been deployed. Coupled with the recent policy directive by the Telecom Regulatory Authority of India that phone companies will have to start compensating consumers for call drops. Given that most telecom operators also have significant stakes in the towers business, it does seem that a carrot and stick approach may be the solution to the India's troubles with interrupted phone conversations.