Towering Business

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Ugly steel towers, with oblong boxes stuck on their sides. No brand ambassadors and no branding either. But, as mobile telephony majors rush to expand their network across India, the 15-metre tall towers that pick up and relay signals from one place to the other are becoming one of the hottest business activities in the information and communication space.

Even a year back, few among investment bankers would buy the idea that passive infrastructure like towers could create value for the shareholders of telcos. New technologies like WiMax could today add to the bonanza and widen the scope of the passive infrastructure business. The towers in future will not only be rented by GSM and CDMA service providers, but also telcos who adopt WiMax technology.

With 1,20,000 tower sites in the country and a demand for a pan-India telecom footprint extending beyond the semi urban landscape, there would be an increase of at least 200% in the number of sites, industry people say.

Investments to the tune of Rs 66,000 crore wil be required for setting up an extra 2,20,000 towers over the next three years, going by the current cost of Rs 30 lakh for a cell site, according to estimates from Cellular Operators Association of India (COAI). If the number of wireless subscriber base in India is to reach 577 million by the end of 2017, the network would require 3,75,000 towers, given an average tenancy of 2:1, say Kotak Institutional Equities Research estimates.

First, it was the third party independent service providers like GTL Infrastructure, who sensed a business in creating the passive telecom network. GTL hopes to have 25,000 towers in the country by 2011. At present, its towers are rented by five operators in several places, mostly in non-metro cities and semi-urban areas. And their business model does not stop at GSM and CDMA telecom service providers.

“We hope that in future, internet service providers (ISPs) and WiMax vendors will also rent our towers,” says Rupinder Singh Ahluwalia, executive vice-president of GTL. Their plans include use of land near the towers to set up communication kiosks for e-governance, wherever there is an opportunity.

Rolling out infrastructure in one of the world’s fastest growing telecom market requires heavy investments. Tata Teleservices Ltd (TTSL), for instance, is rolling out mobile infrastructure in two new circles—Assam and North East.