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-----------------------------------------------------------This story was printed from Voice&Data Online at http://www.voicendata.com Do you want to receive FREE weekly Information Technology updates by email? Sign up for our newsletters at http://www.ciol.com/content/newsletters/ -----------------------------------------------------------Article Title: Towers: Standing Tall URL: http://www.voicendata.ciol.com/content/top_stories/111062302.asp Section: Top Stories Author Name: Ritu Singh Author Email: ritus@cybermedia.co.in -----------------------------------------------------------The last few years saw the telecom infrastructure sector undergoing a phenomenal change. Ever since the concept of infrastructure sharing stepped in the country, the market is getting more and more competitive. Looking at the sweeping growth of the Indian mobile base, the industry is sure to witness a huge leap in the years to come. Today there are approximately 353,813 towers in India with the annual growth rate of about 19% per annum and a total investment of about `100,000 crore. Industry estimates are that an additional 150,000 towers will be needed to meet growth needs of 2G/3G/wireless broadband. This will require additional investment of approximately `30,000 crore. Developments, such as new technologies like 3G and BWA creeping in and rural penetration taking the front seat, have been boosting the morale of the tower industry. According to VOICE&DATA estimates the industry has seen an upsurge in the number of tower erection with 57,248 additions in FY 2010-11. The industry is seeing a lot of action with each player ramping up its cell site. In fact, the pace of change and growth has been so fast that the industry is witnessing a wave of tower erections. The growth in the sector is primarily driven by increasing rural penetration and deployment of 3G services. The current market trends are also forcing the tower cores to shift their focus from building new assets to tenancy. This in turn, is likely to truncate the costs and make every player build a strategic decision based on demand from tenants. The Players As far as tower companies are concerned, Indus (a joint venture between Bharti, Vodafone and Idea) is the leader with 109,073 towers, followed by Reliance Infratel with 58,000 towers, BSNL with 45,000 towers, Viom Networks with 40,000 towers, GTL Infra with 33,681, Bharti Infratel with 33,042, American Towers with 8,000 and MTNL with 2,017. Other players contributing to the tower business were MTS, Videocon, Stel, Idea, Aircel, Etisalat DB, Uninor, Loop Telecom. Indus Towers, the strongest player of the tower market, boasts of a tower share which is more than 43% and tenancy share more than 48%, in the circles that it operates in. The company became the first tower company to achieve a milestone of 200,000 tenancies. Through the Tower Operating Center, the brand increased to 99.97% on an average. TOC, as a centralized monitoring center connected to 110,000 sites distributed over India, will enable many new business models as well as ways of working resulting in efficiencies and technology enabled initiatives to improve lives of people in and around the sites. Moreover, Indus also takes pride in adding another feather to its cap with the successful

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rollout over 22,000 sites for 3G in India in a short span of 6 months.

The key factors that helped Indus Towers achieve greater operational excellence and offer its customers a better coverage in India are its vast footprint, and a keen emphasis on Speed-to-Market strategy, establishing excellent Tower Operating Center (TOC), adoption of green technology and making cost efficiency a way of life. Indus Towers has coverage in 16 circles and healthy tenancy ratio of 1.78x, as well as a high speed-tomarket. With new operators rolling out services, the tower company is on a high-growth trajectory. One of the major milestones for GTL Infra has been the completion of the acquisition process of Aircel's tower business. With this, the overall tower portfolio the brand has grown to over 33,681 towers and this generates a revenue base of more than `1,000 crore. However the standalone revenue from operations for the 12 months ended March 31, 2011 was `490.42 crore as against `347.95 crore in the previous year, recording a y-o-y growth of 41%. GTL Infrastructure is set to have 50,000 towers across India by 2013, post a 3-year rollout plan with Aircel to acquire 20,000 more towers from the company, which will make it the 2nd largest tower company in the world. Viom, formerly Quippo WTTIL, during the last financial year has registered a significant increase in tenancy ratio from 1.7x to 2.35x over the last 3 years. During the last FY, Viom has maintained its incremental Infrastructure Market Share (IMS) of approx 30%. The company has also achieved the second largest share in the incremental Tenancy Market Share (TMS) accounting for approx 33% of the incremental TMS. Coming to another pure play tower company, American Tower Corporation currently has 8,000 towers in its portfolio and has a tenancy ratio of 1.9. ATC acquired Essar Telecom Infrastructure from the Essar Group, for approximately $430 mn in cash. Subsequent to the transaction, which was previously announced in February 2010, the company acquired ETIPL's portfolio of over 4,600 wireless communications tower sites, as well as a number of towers under construction. The acquired portfolio includes sites across 14 of the 23 telecom circles in India and has an industry leading tenancy ratio of 1.9. In addition, this acquisition increases the size of the company's

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communications tower site portfolio in India by almost 3-fold and its global portfolio to more than 32,000 communication sites. Trends Presently, 70-75% of mobile usage is inside buildings. The adaptation of innovative solutions such as Inbuilding Solutions (IBS) will reduce dependence of telecom tower during network rollout. However suitability of IBS is primarily in large buildings such as large commercial complexes, airports etc, which are connected by optic fiber. The biggest advantage of using IBS would be when the data usage increases significantly, since technologies such as IBS ensure efficient usage of scarce spectrum and reduce the load on macro cell-sites. The deployment of IBS would be easier in new and upcoming buildings than a retro-fit into existing buildings. The last fiscal also saw a sudden fall in the number of BTS cell sites and steep increase in the demand of Node B. Rollout of 3G has brought massive transition from voice to data application, calling for the existing BTS cell sites to be upgraded into Node B in order to support the data influx. According to data released by Trai, the demand for BTS/Antenna has been on a consistent fall since the past 3 years- 5,658, 1,489, and 1,013 with respect to 2009, 2010, and 2011. Globally 5 mn base stations are supposed to be added in next 5 years with roughly 1 mn base stations being added each year. India would be roughly adding 10% of these base stations. Conclusion The telecom tower industry in India is expected to grow at 20% during the next 5 years. This growth is driven mainly by the current capacity constraints, increased rural penetration strategy, and additional requirement for rolling out 3G and BWA services. It is a safe bet for operators joining hands with tower companies as it is faster and cheaper to roll out the network by collocating with Infrastructure operators (IP) rather than expanding their own network. Moreover there is still a huge untapped rural market that is encouraging operators to compete in an aggressive manner. During the last fiscal, many industry players have erected additional 3G tower requirements spanning across years for 3G rollouts. In order to achieve effective coverage, 3G operators today need one 3G BTS for every two 2G BTS, that indicates the huge growth prospects for the industry. Ritu Singh ritus@cybermedia.co.in

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