After witnessing flattish growth over the last 2-3 years, telecom tower companies are now looking to the growth phase largely driven by the increasing roll out of data networks. Bharti Infratel with 83,000 towers is among the players expected to ride on this growth. DS Rawat, CEO of Bharti Infratel, explains the reasons for the growth expectation and challenges ahead.
The Government has recently allowed spectrum sharing. Will this impact your business as it will bring down the need for tower sites?
Anything that’s good for telecom operators is good for us because they are our customers. Spectrum sharing is even better for larger telecom players. Our advantage is that 85 per cent of our revenue are from big three operators — Airtel, Vodafone and Idea Cellular. We see a lot of their growth translating into growth for us. Our contracts are 10-15-year contracts and we want the industry to be viable. Overall sentiments are picking up. Our next phase of growth will come from operator’s focus on data services.
With operators rolling out 3G and 4G services, will there be an increase in demand for towers?
Our run rate will continue to be about 2,000-3,000 towers a year. Operators are using 2100 MHz for 3G and 2300 MHz for 4G and with these two spectrum bands, you would need more than existing towers. But 80 per cent data are being generated indoors for which you don’t need big towers. The fact that data spectrum is limited means that operators will need to fill existing network gaps and start offloading to alternative solutions like Wi-Fi. It’s a choice between do you want to buy more spectrum or build more sites. That’s a trade off will be in favour of building new sites initially.
Is Bharti Infratel looking to offer in-building solutions?
We have done some in-building coverage projects for airports. We are also looking at hotels and hospitals and offer in-building solution on a shareable basis between operators. Currently, 5 or 6 operators will be rigging the same building with their own network.
Will you also offer Wi-Fi offloading on a shareable basis to telcos?
Currently, operators are doing this on their own. We have started offering an option to telcos to plug in and start doing Wi-Fi using our infrastructure. But this is on a small scale now. We don’t want to get into operators’ domain so we are looking at whether such a model brings significant savings to telcos.
Government is looking to allow active sharing of network by differentiating service operators and network operators. Will you be interested to get into that space?
In theory, we can do that. But we will have to see markets demand and how the regulations come about.
How do you see consolidation in this space and do you plan to grow inorganically?
We have cash, we are zero on debt so we can leverage. Our strategic intent is to grow inorganically in the country and in the region. Towers, owned by Vodafone and Idea Cellular, are strategic fit and our interest as a buyer is known. So far most of the deals have not worked in the industry due to valuation gap. But since we have listed on the stock exchange we have become a reference point on valuation. You will see some deals happening.
What will be the impact of bringing tower companies under revenue share licence regime?
It’s a negative for us. The telecom operators are already paying licence fee so this will be like taxing them twice. Tower industry is capital intensive industry. Apart from Bharti Infratel, most of the other players are saddled with debt. Anything that you do to tax us more is going to be counter-productive.