Towering Business

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a major part of it will be for putting up the telecom towers,” says the company’s eastern region head, Sanjeev Khera. The newly-formed tower company, Wireless TT Info Services Ltd (WTTIL)—a 100% subsidiary of TTSL—will set up the tower infrastructure in the North East and Assam.

One of the future sources of revenue for WTTIL will be sharing its tower infrastructure with the other service providers both present and the new license applicants. Khera’s senior colleague, Anil Sardana, managing director of TTSL, has already been talking about a definite road map for the tower company. TTSL will have 10,000 towers by March 2008. It is planning to divest up to 49% stake in the new entity and the process of divestment is at an advanced stage.

“TTSL has appointed investment bankers and has received a huge response from around 30 players. The disinvestment process is expected to be completed in six months,” says Sardana.

A few years back, erecting, functioning and maintenance of the towers were the sole responsibilities of the mobile service providers and like ATMs in the banking, infrastructure was captive and there was no sharing. But everything changed when telecom service providers started sharing the infrastructure because of the lack of space in cities, need to have faster rollout and to minimise the capex cost. The telecom subscribers’ boom and the need to have connectivity beyond the semi urban boundaries and in inhospitable terrain have changed the entire telecom infrastructure business.

One has to read the analysis prepared by the equity research analysts either for their telecom clients, third party tower companies or independent industry estimation to see the quantum of the business that waits for those who want to set up telecom towers and rent them to the telecom service providers. The economics of the tower business is not too complex. The capital expenditure of setting up a tower is around Rs 30 lakh. The average rent every month is Rs 35,000. So if there is one tenant, the break even will happen in 10 years, with two tenants, it is 7 years and for three tenants, 5 years.