Telecom Lead India: In 2011, the telecom tower industry
observed decline, as it added less than 10,000 towers in a year due to
oversupply of towers in urban areas and viability issues in rural areas.
Telecom industry growth was affected due to heavy fee paid for 3G and broadband
wireless access (BWA) spectrum in 2010.
Base Transceiver Station (BTS) deployment by telecom
service providers in India stands at 680,465 as on September 2011, grown over
20 percent from September 2010.
BTS expansion in FY 2011 was limited to metro and
category A circles whereas post FY 2011, telecom service providers moved
towards untapped rural markets.
CARE Research estimates that % growth in number of BTS in
India will be more than double the % growth in number of towers, which will
grow at mid-single digit over next two years.
Meanwhile, the tower industry shifted its focus from
building more towers to increasing tenancies as single-tenant towers are not
viable and tower sharing proved to augment industry profitability.
Faster growth in number of BTS as compared to the towers
will enhance the tenancy ratios for tower companies from current 1.6x to 1.9x
due to increased sharing of towers by FY 2014,” said Revati Kasture, head –
CARE Research predicts that urban areas will see
improvement in tenancies as additional BTS will be mounted on the existing
tower network which has excess capacity whereas new towers need to be erected
in rural areas for adding more BTS as the expansion will mostly
happen in uncovered, smaller villages.
Main drivers for BTS growth will be congestion in urban
areas due to 2G subscriber growth and increased data usage as telephony in
India moves from voice to data, rural subscriber growth and planned roll-outs
of 3G and 4G services.
The research also revealed that one of the major hurdles
in the expansion of telecom towers is backhaul connectivity. India’s 1,000,000
km Optical Fibre Cable (OFC) network is predominantly limited to urban areas
and bigger villages, leaving microwave connectivity as the next best
alternative. Microwave connectivity will have its limitations as urban areas
embrace data intensive 3G and 4G services.
Hefty amount paid for 3G-BWA spectrum impacted network expansion
plans of telecom service providers and cut-throat competition in the telecom
wireless segment brought down tariffs and hence the profitability of the
players, according to CARE Research.