4G rollout to drive major boom for Indian tower firms
The expansion of 3G and onset of 4G technologies is set to increase telecom tower industry tenancy ratios to 2.9 times by March 2020, up from 1.95 times as of March 2015, according to a joint study by ASSOCHAM and KPMG.
The tenancy ratios refer to how many operators have put their active infrastructure on a tower, acting as a key growth driver for tower companies in India.
The study found that around 70% of India’s 400,000 towers are owned and operated by tower companies. Emerging technologies such as 4G will help drive expansion of the telecom infrastructure industry in the country over the next five years, the study claimed.
The growth of the sector, which has also been driven by expansion of telecoms infrastructure in rural areas, has also led to a significant increase in capital expenditure by the tower firms. Aggregate capex spend grew from INR 80 billion ($1.19 billion) in 2013/14 to INR 102 billion ($1.5 billion) in 2014/15. 15% of this was spent on towers running on green energy.
Net tower additions also increased, from 3,200 in 2013/14 to 6,300 in 2014/15.
“India has been the most preferred destination for investment in the tower sector in the Asia,” said ASSOCHAM president Sunil Kanoria. “Since 2008, seven out of the top 20 deals in Asia in tower sector have originated in India. More than 84,000 towers have exchanged hands in India since 2008 (which represent 84 per cent of the total towers sold in top 20 deals in whole of Asia during the period). Deals amounting to INR 40,367 crore have been finalized during this period.”
India is the second largest mobile market (after China), with more than one billion connections by the end of February 2016. 608 million of these are urban based, with 443 million rural subscribers. The telecoms sector contributes around 6.1% to India’s GDP annually, the report claims.