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Telecom towers are the integral part of the telecom network infrastructure.

In fact
they are the most expensive to build and the valuations are heavy. The business has
outgrown itself that most of the companies have hived off the tower business as its
own entity.

Tower business is making news lately for the explosive growth and exponential
investments involved. It requires a lot of investment to survive and the smaller
companies are finding it difficult. There has been some consolidation which has
happened already.

Indus Towers a joint venture of Vodafone, Bharti Airtel and IDEA is formed.

Indus Towers = Ortus Infratel Holding (Vodafone – 42%) + Bhart Airtel (42%) +
IDEA (16%)

American Tower Corp has acquired Xcel Telecom towers for 700 crores.

Quippo Telecom has acquired Spice Telecom’s tower business and Tata
Teleservices WITIL is merged into it.

BSNL has planned to lease its towers for better revenues. Because of the intense
competition each tower needs more than 2 tenants to stay profitable. The current
rates are a bit low and hence the sharing and consolidation.

Here is the list of 13 telecom tower companies India based on the number of
towers :

Company Approximate number of


towers
Indus 80000
Reliance Infratel 31000
Bharti Infratel 20000
Quippo Telecom Infrastructure 23000
(QTIL)
GTL 9000
Essar Telecom 6000
American Tower Corp 4000
Tower Vision 3000
Aster Infrastructure 1000
India Telecom Infra Limited 1000
KEC International 400
Independent Mobile 400
Infrastructure

As new players come along, the tower business will be intense as it would be difficult
for a new player to build its own infrastructure. The independent mobile tower
companies will gain a lot. If the established player too share their towers then the
new telecom players can roll out their networks quickly and the tower companies can
increase their revenues. (source for the table above)
Telecom Towers and Tower Companies
Consolidation in India – Indus Towers,
Bharti Infratel, Reliance Infratel, Tata-
Quippo, Aircel
Ever got frustrated with your mobile network’s poor signal quality ? Most likely, it could
have happened when you traveled or moved away from town/city. As most of you know,
mobile signal quality in a region depends on your Telecom Service Provider’s network
infrastructure. Telecom Towers being the integral part of any mobile network
infrastructure, have you ever wondered why your Telecom Provider have not installed
enough Towers in every village and Highways in the country ? Read on to know more.

Telecom Towers are very expensive (each Tower is valued at 2 crores) to build and
operate for any Telecom Providers in the country. Cost wise, they prefer to install and
operate towers in high mobile density regions rather than in less populous regions. Since
Towers need enormous investments, many companies have hived off tower business as
its own entity. Nevertheless, small telecom companies are finding very difficult to own
and operate towers.

The all-India tele density is around 45 percent, while the same is just 15 percent in rural
India, implying a huge untapped market. The current rural ARPU (Average Return Per
User) is estimated to be around Rs. 165. For an Operator, the lower per subscriber
profitability and higher cost of reaching their customers justify the need for infrastructure
sharing in the rural areas.

Good part of Telecom Towers are a single installed unit can be a home to multiple
telecom providers. Mean, the same telecom tower can be used by multiple companies for
distributing the signals. Companies have already started to share their infrastructure to
bear with the tower investment pains. This business has outgrown exponentially and
today there are independent companies to install and manage only the telecom towers.
As of March 31, 2009, there were approximately 2,60,000 Telecom Towers in the
country. And, here is the split up of numbers :

A. 1,02,000 towers were owned by operator driven joint ventures


B. 75,000 were owned by tower companies set up by operators
C. 66,000 were owned by directly by operators
D. 19,000 were owned by independent tower companies.

But, market has changed a lot after March. There were more consolidations happening in
the Telecom Towers Space. Quippo Telecom has acquired Spice Telecom’s tower
business and Tata Teleservices Tower Business Unit is merged into it. American Tower
Corp has acquired Xcel Telecom towers for 700 crores recently.

Indus Towers, a joint venture of Vodafone (42%), Bharti Airtel (42%) and IDEA
(16%) is fast growing and already has more than 1,00,000 Towers up and running and
claiming itself to be the World’s largest Tower company by installation units.

Reliance Telecom Infrastructure, the newly hived off telecom tower unit from Reliance
communication is fast ramping up in Tower installation and sharing with other new
players.

Meanwhile, one of the fastest growing mobile networks in India – Aircel, has planned to
exit its tower infrastructure operations completely by selling it off to one of the Tower
Infrastructure companies. GTL Infrastructure, Tata-Quippo and Bharti Infratel are in
race to buy for around $2 billion.
BSNL has planned to lease its towers for better revenues. Because of the intense
competition each tower needs more than 2 tenants to stay profitable. The current rates are
a bit low and hence the sharing and consolidation.

There are few other small Telecom Tower companies like Essar Telecom Infra, Tower
Vision, Aster Infrastructure, KEC International, India Telcom Infra etc.,. Larger Tower
companies like Indus, Reliance Infratel and Bharti Infratel are planning to buy these
small players. So, we can see more consolidation in this space.

Update: GTL buying Aircel Tower Business is confirmed.

Update : Essar Telecom towers bought over by American Towers

Update : Reliance Infratel and GTL infra deal – 80,000+ tower company
Fuel cells back-up for telecom towers
UK-based Intelligent Energy says such a scenario is not too far away..

Typically fuel cells have efficiency of conversion of 50 per cent which will be much higher than the efficiency
of a diesel generator whose efficiency ranges between 5 per cent and 20 per cent.

M. Vedhan

Poweredby innovation.

M. Ramesh

Rs 10,000 crore — that's how much telecom tower companies spend on buying diesel for their back-up
gensets each year, according to one estimate. Today, there are about 3,00,000 towers and about 50,000
more would need to be added each year for the next five years — and most of them will come in far-flung
locations. Since in India availability of grid power is a matter of luck, you need to provide all these iron giants
sufficient back-up so that they stay energised round the clock. Towers consume not less than 120 units a
day and you can do the math for costs.

Diesel gensets have been the obvious choice but diesel is dirty and costly; and any deregulation of diesel
prices will only emaciate the wallet further.

Is there a viable alternative to diesel? Well, people have been trying to integrate diesel with solar panels, a
kind of a double back-up, but it comes with a price, as you would have to invest in both systems and their
maintenance.

One UK-based company, Intelligent Energy, is posing fuel-cells as an alternative. We've heard of fuel-cells
in the context of automobiles — General Motors is doing this and Toyota is doing that — but this technology
is sufficiently advanced for stationary applications — such as back-up for telecom towers.

Fuels cells are, conceptually, reverse electrolysis. In electrolysis, you pass electricity to split water into
hydrogen and oxygen. In fuel-cells you mix hydrogen and oxygen to produce electricity.

In an interview to eWorld, Murali Arikara, Executive Vice-President - Emerging Markets, discusses the
economics of fuel-cells under telecom towers.
Murali Arikara

So, you see a big market in India?

Yes. Today, you are looking at 10-12 hours of power outages. Diesel prices going up and with deregulation
of diesel prices, the fuel prices could go up by 30 per cent. There are 3,30,000 telecom towers in India, and
50,000 would need to be added year after year for the next five years.

What are the alternatives you are competing against?

Solar. Solar has pretty significant subsidies from the government and so they are able to look at solar from a
different stand point. Some people have tried solar panels and micro-wind generator combinations. But we
will be competitive against them, because what we are competing against is a solution that you don't have
much control over. Unlike us, what they are doing is offsetting a few hours of diesel operation, but not
eliminating it.

How expensive would the fuel-cell machines be?

If you look at the operating cost, we will be very competitive. Diesel power today costs anywhere between
Rs 22 and Rs 75 a unit, because they run gensets at a range of efficiency levels depending on the
requirement.

Typically fuel cells have efficiency of conversion of 50 per cent which will be much higher than the efficiency
of a diesel generator whose efficiency ranges between 5 per cent and 20 per cent. Our biggest challenge is
the price of hydrogen. We are negotiating with several people. If we get hydrogen at Rs 350 per kg, we will
be competitive.

What does hydrogen cost today?

It is hard to tell because it varies from place to place and depends on what quantities you buy.

Diesel is available everywhere, but hydrogen?

The logistics chain will shift from delivering diesel to generators to delivering hydrogen for fuel cells. There
are currently several chlor alkali plants that provide hydrogen as a by-product. In the initial stages we plan
on utilising this existing source of hydrogen. As the market develops we will work on developing the
hydrogen infrastructure through investments made along with partners in developing this infrastructure.
But how much would your machines cost, to the customers?

We are looking at providing the machines as a service. As part of that, we are trying to find partners in India
whom we can work with — existing companies that are already providing services to cell tower industry. I
can't give any names at this point.

Our plan right now is to have some initial system deployed to prove to the end user, and then over the next
year have some more deployments and go in for full-gear implementation after that.

At this time all I can say is that we plan to be at the initial stage price competitive or on price parity with
diesel generators. We will know more once we have deployed more systems in the field and account for all
the costs, including those of delivering hydrogen to the sites.

If the market is as big as you describe it, does it make sense for you to produce the fuel cell systems here?

Yes, that is what we are working towards. We are talking to a few players in India. We will select one of
them to set up a joint venture.

The fuel cell devices generate tremendous amount of heat. How would you address this issue?

In our case the fuel cell is proton exchange membrane (PEM)-based fuel cell operating at around 10 degree
Centigrade above ambient so the heat rejection is at a temperature that is close to ambient.

There are some fuel cells such as Solid oxide fuel cells that operate at close to 1,000 degree Centigrade
and the heat rejection there is at a higher temperature. We do not use this type of system.
While the tower business was one sector that was unaffected by recession, however, the entry of new
players has caused a minor dent in the fortunes of established players, who are seen to be increasingly
struggling in a price-volatile Indian market with falling ARPUs, rising capex and opex costs only adding to
the muddle.

While the excitement in the tower business began early in the new year with the GTL-Aircel merger,
making GTL the first independent tower company to cross the 10,000 towers mark, the success story only
continued to grow with Aircel emerging as the biggest winner in the 3G auctions, no doubt helped by
GTL's impressive financial backing. With other operators who possess a growing tower business, it has
made way for a huge spurt in the tower business. This year, with 3G spectrum, operators will be more
focused on active infrastructure sharing in urban areas for the first time, apart from passive infrastructure
sharing continuing in rural areas. This is only helped by the popularity of solar powered and green towers
as well as green technology to combat the expected increase in the tower footprint. So, overall an exciting
time for the telecom tower business in India has just begun.

India has a subscriber base of 621 mn subscribers as on March 31, 2010, aided by the successful launches
by new operators such as TTSL and Uninor; and these numbers are expected to reach 1,019 mn by 2013,
as per the COAI estimates. The CLSA research states that the country could require around 4,63,000
towers to meet the network coverage requirements of the operators. This translates into an additional
demand for approximately 1,30,000 towers over the next three years.

Share and Spread Out


Five new operators received pan-India licenses in CY 08. Telecom Regulatory Authority of India (Trai) has
set period specific rollout targets for the new licensees. Failure to achieve these targets will result in
penalties for the new operators. The new entrants also face an already crowded telecom market with up to
seven competitors per circle, thus intensifying the competition. Thus, they require tower infrastructure in
place over a short period of time to garner subscribers and meet rollout obligations.

This only pushes the case further for infrastructure and asset sharing. Now given the case of only a
chosen few winning 3G, they will have to bear the winner's curse of setting up the towers, besides having
to bear the Rs 50,000 crore burden. With the tower business contributing majorly to the global footprint, it
only makes business sense for M&As, outsourcing or infrastructure sharing to proliferate in the current
scenario. This can not only reduce incremental costs, but ensure a robust, speed to market and cost
effective rollout of services with seamless connectivity for
the new and existing networks.

The size of sharing opportunity across India is enormous.


It is estimated that there are roughly 2,00,000 towers
currently in operation in the country and the number is
expected to increase to 4,63,000 in the next five years.
This expected growth is linked to a significant remaining
network expansion. This tower forecast could be reduced
significantly if we factor in the potential for widespread
tower sharing which would involve billion dollars of
investment.

In its recommendations, Trai noted that service providers


were already sharing infrastructure selectively, with
approximately 25% tower sites being shared for passive
infrastructure.
V&D estimates CyberMedia Research
Historically, passive infrastructure sharing in India has
been in the form of sharing among wireless service providers, along with the provision of passive
infrastructure services by small tower operators. However, wireless service providers such as RCOM,
Bharti, Airtel and Tata Teleservices have recently transferred passive infrastructure to independent
subsidiaries, which will operate as independent third party passive infrastructure providers. This indicates
a trend towards the growth of passive infrastructure industry in India.

Key Developments
While GTL Infrastructure is set to have 50,000 towers across India by 2013-post a three year rollout plan
with Aircel to acquire 20,000 more towers from the company-which will make it the second largest tower
company in the world. Currently as on March 31, 2010, GTL has 12,456 towers in various stages of
completion. The number of towers including those under implementation increased from 9,411 in FY 2009
to 12,456 in FY 2010, with the company posting a growth of 32%. The combined entity of GTL and Aircel
is expected to be 32,000 towers. Besides, WTTIL-Quippo's also acquired TTML's 2500 towers in
Maharashtra and Mumbai circles for a value of Rs 52 lakh per tower. After the acquisition, the company is
expected to have a total of 35,000 towers. In addition, ATC's acquisition of Essar Telecom Infrastructure's
(ETIPL) 4,450 towers and 325 towers of Transcend Infrastructure last year has increased its footprint to
7,000 towers in India. Thus, as tower ranking stands today, Indus (a joint venture between Bharti,
Vodafone and Idea) is the leader with 95,000 towers, followed by Reliance Infratel with 47,000 towers,
BSNL with 45,000 towers, Bharti Infratel with 27,500 towers, WTTIL-Quippo with 21,000 towers, GTL
Infra with 7,500 towers, Idea Cellular with 7,500 towers, Optus (Vodafone) with 6,500 towers and Essar
Telecom with 4,500 towers.

According to VOICE&DATA research, erecting one cell site involves an investment of about Rs 30 lakh.
Therefore, for setting up 2.2 lakh more towers in the next three years, Rs 66,000 crore will be required.
Besides, India is set to touch 600 mn subscribers by 2011. This means that there are close to 1,50,000
more towers needed from the present base of roughly 2,58,000 in the next two to three years, which
would amount to a requirement of 5,54,000 towers by 2015. The industry is expected to have grown to
3,30,000 towers as on March 2010 from 2,80,000 towers in FY 2009.

Future Trends
• Focus on Innovation: Providing pre-agreed fixed power and fuel (P&F) bill rather
than the current practice of billing P&F based on the actual consumption;
providing sites that are backhaul-ready to reduce operator's capex requirements
and expedite rollout; pricing strategies such as rollout based and volume based
discounts
• Cost Reduction/Optimization: Managing landlord rents and reducing security
expenses, which are the two largest cost heads
• Disciplined Rollout of New Towers: With the industry tenancy ratio already
touching around 2x, most tower companies will set up new towers only to service
their ROFR requirements or when they are assured of at least two tenants
• Improvement in SLAs: Tower companies will be expected to move towards
proactive maintenance unlike the current practice of reactive maintenance. In this
regard, few tower companies have made a beginning by setting up their TOCs
(tower operating centers) to monitor the site performance

• Process Improvement and Organization Restructuring: As demand starts to


slacken and tower companies begin to integrate, they will start focusing on
improving their business processes, IT systems and asset databases to better
service their customers. Tower companies are also expected to adopt a more
structured mechanism of developing strategies for the future growth to overcome
competition

The 3G Push
With the onset of 3G, there is set to be a huge transition from voice to data applications and increased
NGN services. With the government's aim to quickly spread the new technology across the length and
breadth of the country, the setting up of telecom tower dilemma in rural areas is set to intensify with
inaccessibility and expensive infrastructure costs coupled with slow RoI. This calls for even more passive
infrastructure sharing.

In addition, using 3G technology, operators are likely to step up the peak data transfer offered to
consumers. The higher transmission frequency (2,100 MHz) and the greater data rate that operators
would like to offer will necessitate more cell sites for the 3G coverage. According to an industry estimate,
with the effective coverage in all major cities, operators will need one 3G BTS for every 2G BTS. The high
3G license fees expected to be paid by the operators will make sharing an unavoidable option for the
operators to start their rollouts. International carriers are also banking on 3G auctions as the entry point
into India. As guidelines for sharing of all active elements is allowed, it will further help the dynamics of
3G rollout.

Operators are expected to rollout 50–60,000 3G sites within two years of getting the spectrum. The rollout
is expected to primarily cover the key cities and towns where the uptake is estimated to be higher.
By Manoj Govindassamy - { 28/06/10 }

Telecom Towers & Infra consolidation


continues – Reliance Infratel inks in
deal with GTL Infra – 80,000+ tower
company
The telecom towers business is into active consolidation and has already seen 5
significant deals in the recent past. The latest one is the largest of the kind and is between
ADAG (Anil Ambani owned Reliance Group) and GTL.

ADAG’s mobile infrastructure company Reliance Infratel and GTL Infrastructure has
agreed upon Rs. 50,000 crore deal, by which telecom towers of both these companies will
be managed by a new entity which is neither owned nor controlled by any telecom
operators. The telecom tower company thus formed would be one of the world’s largest
tower asset company by tower numbers and values.

It is said, GTL Infrastructure would hold 33% stake and will be the largest shareholder in
the proposed combined entity with Reliance Infratel. Anil Ambani’s stake in the entity,
estimated to be around 26%, will be mostly in his personal capacity.

The combined entity will have over 80,000 towers (50,000+ from Reliance Infratel and
30,000+ from GTL Infra) and will be tower home to telecom operators like Reliance
Communication (obvious), Aircel (because Aircel tower business was bought by GTL
recently), Tata Teleservices and various other new players like Stel, MTs, Uninor,
Videocon.

RCom has a debt of over 28,000 crore (including the latest 3G spectrum wining bid) and
been a major worry for the company and its shareholders. To clear off its debt
completely, the company has been on the active move. It is in talks with overseas
Telecom majors to sell its 26% stake. Reliance Infratel deal and stake sale would help
ADAG to complete shave off RCom’s debt.
But, the optic fibre assets which are currently under Reliance Infratel is not part of the
deal and would go under RCom. ADAG is planning a different game with these assets
which includes a optic fibre network of over 2,00,000 kms running throughout the
country. It might be leasing out the network to wireless broadband spectrum winners to
cash out its network assets.

You may be interested in these articles:

• Telecom Towers and Tower Companies Consolidation in India – Indus


Towers, Bharti Infratel, Reliance Infratel, Tata-Quippo, Aircel : Telecom
Towers being the integral part of any mobile network infrastructure, have you ever
wondered why your Telecom Provider have not installed enough Towers in every village and
Highways in the country ?... Nevertheless, small telecom companies are finding very difficult
to own and operate towers.The all-India tele density is...

• Essar Telecom Infra bought over by American Towers’ Transcend Infra –


More consolidation in Telecom Towers business : ..Transcend Infrastructure Ltd
(TIL) the subsidy of American Towers Corporation (ATC) is taking over Essar Telecom
Infrastructure in an all cash deal and making a tower valuation of around 45 lakhs which is
same as the previous GTL-Aircel deal. To get this deal done, Transcend has entered into
share purchase...

• GTL Infrastructure buying Aircel Telecom Tower Business – More


consolidation in Telecom Towers : Having already discussed about consolidation
thats going to happen in the India Telecom Tower Businesses, the following news is no
surprise for us. The new entrant to tower business, GTL Infrastructure informed the stock
exchanges today that the company board will meet on Thursday for consideration of
opportunities for strategic...

• Siva’s latest investments – Sujana Towers, Karuturi Global, KS oils, Ruchi


Soya, Arihant Housig : Siva Group’s privately-held entity Siva Projects Engineering
and Enterprises Limited (SPEEL) has acquired 1.5% for around Rs. 20 crore Sujana
Towers a company which is engaged in manufacturing telecom and power towers, mobile
communication towers, their operations & maintenance and related services. ... Karuturi
which is world's largest Rose producer...

• Tulip Telecom forays into consumer space ? to pick up 26% stake in


Qualcomm’s Wireless Broadband business : But, Tulip's recent move would make
it one of the consumer brands in the country. It is rumoured that Tulip Telecom is about to
pick up 26% stake in Qualcomm's Wireless Broadband business. ... But, as per the Foreign
Direct Investment (FDI) norms in Indian Telecom, a foreign entity cannot...
Telecom Towers: A Combination of Passive and Active Infrastructure
Sharing Seems to be the Way to Go
Thursday, 17 June 2010

The telecom tower business has evolved as a separate entity in India, even though valuations
are down and profitability elusive. As on April 2010, the total number of towers in the country
was 337,000. Indus Towers stood tallest amongst its competitors with a total count of 1,08,000
towers. Rest of the pie was shared between BSNL and MTNL (60,000), Reliance (50,000), GTL
(33,000), Bharti (32,000), Quippo-WTTIL (31,000), ATC (7100), and other players. The industry
is anticipating a requirement of 150,000 towers within the next three years. Pan India rollout
plan by regional operators like Aircel, IDEA, Reliance GSM, and rollout of 3G & WiMAX network
by second half CY10 will add momentum to the industry. Tele-density in India reached 51
percent in the FY 2009-10. This will trigger an expansion in the telecom tower space. At the
moment, telecom infrastructure has evolved into an independent industry along with passive
infrastructure sharing becoming a standard practice.

Current Scenario
Smaller tower vendors are increasingly finding it
difficult to hold their ground in the face of stiff competition from larger players and are
considering mergers. Consequently, consolidation has picked up pace in the industry and led to
lower tower valuations. On the other hand, building and installing a new tower takes time,
money and effort; renting is easier, faster, and cheaper. Henceforth, most operators,
especially the new ones, are now taking towers on rent, setting the pace for tower companies
to try and outgrow one another to get a bigger share of the tenancy pie. For instance, S Tel, a
JV between India's Siva Group and Bahrain's Batelco, has launched GSM services in four circles
and has rented 30,000 towers.

Spectrum allocation on less efficient 2100 MHz and network coverage expansion by operators in
the semi-urban and rural areas will fuel the demand for towers. Driven by the success of the
first phase of the shared mobile infrastructure scheme, the government has announced the
second phase, which envisages the installation of an additional 11,000 towers in the rural
areas.

Although the telecom ministry had recommended sharing of active infrastructure (antennae
feeder cables, Node B, RAN and transmission systems) in 2008, it is yet to gain traction. Passive
infrastructure space and energy management has gained significance as the mobile subscriber
growth is heavily dependent on off-grid population. With advantages such as sizeable reduction
in OpEx and CapEx, accelerated network rollout and reduced time to market, infrastructure
sharing has become a compelling business case for telecom operators as they target the next
level of growth.

Active Sharing for 3G & WiMAX

With the rollout of new technologies, the telecom infrastructure vendors are gearing up for the
next step in infrastructure sharing sphere namely active infrastructure sharing. In the WiMAX
space, 20 MHz of space will be auctioned which will offer 40 Mbps of capacity from one tower
site. This capacity presents the possibility of sharing among multiple players. With 3G, huge
broadband growth is expected along with data rates being hundred times higher than what is
being offered currently at the same ARPU. As technology upgrades, no additional revenue will
be available to the operator. Active sharing seems to be a viable solution in order to keep a tap
on the operator's expenditure.

While active infrastructure sharing will help the new operators survive in the increasingly
competitive scenario, it will be a new source of revenue for existing operators, who will derive
benefits from CapEx and OpEx savings. The bottlenecks in the adoption of active sharing
include the lack of points of interface for interconnections and degree of loss of control over
the equipment shared. Nokia Siemens Networks has launched a flexi Node B, which offers the
flexibility to remove the solution out of a joint venture in case of differences and stand alone
as well.

Major Challenges

One of the biggest challenges with respect to telecom towers in India is catering to the growing
rural teledensity, which has the purchasing power, but is limited by road and rail network.
Passive infrastructure sharing faces a challenge as there are no uniform guidelines laid down by
civic authorities for installation of cell sites across the country. Even a 25-30 percent of success
in the active sharing business can have an impact on the businesses of the passive
infrastructure providers as it reduces tenancies by 12-15 percent. High initial capital
investment is another major challenge faced by the industry. On an average, CapEx for a roof-
top tower is around Rs. 15 to 20 lakh and for a ground-based tower is Rs. 24 to 28 lakh.

Guidelines by TRAI and other legal authorities pertaining to location, construction, taxation of
towers is a major hurdle. Recently, Noida Authority took an action against service providers
who installed towers without requisite permission. About 500 mobile towers in Noida had been
sealed. Similarly in Delhi, the MCD had sealed 24 telecom towers and asked the operators to
pay a regularization fee of Rs. 5 lakh which earlier was Rs. 1 lakh. The most recent TRAI
guideline states that a rooftop tower may be installed only on RCC buildings. The enterprise
find it prudent to get prestigious institutes like the IITs and the Central Building Research
Institute (CBRI) at Roorkee to design the towers on rooftops.

A proposal is finalized by the Ministry of New and Renewable Energy for telecom companies to
install solar panels to generate backup power for cellphone towers. It is aimed at containing
the use of polluting diesel gensets to provide back-up power. This move could increase the cost
of network expansion significantly.

Latest Developments

GTL Infrastructure recently acquired telecom service provider Aircel's tower business for Rs
8,400 crore. It paid Rs 48 lakh for each of Aircel's 17,500 towers, showing a sharp drop from Rs.
2 crore that a tower commanded just two-and-half-years ago. The highest tower valuation
today is commanded by Indus Towers with 108,000 towers, for Rs 70 lakh per tower. Given that
building a new tower costs Rs 28 lakh, tower companies are buying up as many towers as they
can. Buying towers brings readymade tenants. And towers, being dependent on rentals for
revenue, need as many tenants as possible. For instance, while GTL's buy takes its tower count
up to 33000, it also gets Aircel as an anchor tenant.

Transcend Infrastructure Ltd (TIL), the subsidiary of ATC, has taken over Essar Telecom
Infrastructure in an all cash deal and making a tower valuation of around Rs. 45 lakhs which is
same as the previous GTL-Aircel deal. It acquired 4450 wireless communication sites for a total
consideration of Rs. 2064 crore. The move has tripled ATC's presence in India. Essar's site
portfolio averages 1.8 tenants per tower. Tata Teleservices Maharashtra (TTML), is planning to
sell its telecom towers for an enterprise value of Rs 1,318 crore to Quippo-WTTIL.

Renewable Resources: Need of the Hour

Currently, the total annual carbon emission from telecom towers in India is 5.3 million tonnes.
The annual cost of diesel incurred in running the towers across India is estimated at Rs. 6400
crore. These figures highlight the growing need to promote the adoption of renewable energy
options for the Indian telecom sector.
Alternative energy options including solar and wind energy can address the challenge of
unavailability of reliable power supply in semi-urban, rural and remote areas, thus enabling
telecom connectivity for the remote parts of the country. Renewable resources of energy will
not only reduce the OpEx by 15-20 percent but also hold a viable alternative to the power crisis
under rising fuel prices. An estimate for 120,000 telecom towers in rural areas that run on
diesel gensets for almost 12 hours a day consuming 24 litres of diesel indicates the cost of
running these towers to Rs. 300 crore per month. It has become imperative for the telecom
operators to look for alternative sources of fuel to run these stations, such as solar power,
wind power, biodiesel and biogas, which may provide feasible solutions to the problem and also
contribute towards a greener environment with zero emissions. GTL Infra has started moving
from diesel to solar and other alternate sources of energy. Bharti Airtel has also initiated a
pilot project in the same direction.

Another subject of concern is the health issue regarding the electromagnetic radiation from
base stations mounted on telecom towers. Since 3G and broadband wireless systems are to be
inducted in the near future, it will be prudent to study the effects of radiations from these
systems with a view to fixing limits. There are rulings by the authorities for the erection of
towers but there is no authority to regulate radiation from these towers.

Future Outlook

The telecom industry in India is poised for continued growth with robust net additions and
shared network infrastructure has an important role to play in the coming future. The total
requirement of spectrum in the next five years is 500 MHz to 800 MHz, while 450 MHz spectrum
will be available. Anticipating the future demands, TRAI has recommended spectrum sharing.
India's rural mobile teledensity is expected to reach about 36.25 percent by 2013. Realizing the
potential of the rural masses, the government plans to construct 10,000 towers connecting the
remote parts of the country within this fiscal. In metros today, mobile operators need a tower
every 200-400 meters to service their customer base, and will require an additional 100,000-
150,000 towers by 2013 to meet the growing needs of the population. The market is poised for
a 17 percent per annum growth with the estimated requirement of 554,000 towers by 2015.