Telecom tower tenancy ratio to rise to 2.9 by 2020: Study

Mainly on account of expansion of 3G and onset of 4G technologies

The tenancy ratio of the telecom tower sector is set to increase to 2.9 by March 2020, from 1.95 as of March 2015, driven by expansion of 3G and the onset of 4G technologies, says a new report by Assocham-KPMG.

Tenancy ratio refers to the number of tenants, or operators, who have put up their antennae and other active infrastructure on the towers. Increase in tenancy ratio has been the key growth driver for tower companies in India.

Around 70 per cent of India’s 4,00,000 towers are owned and operated by tower companies. The advent of new technologies such as 4G and increased mobile reach in rural areas will be the key drivers for the telecom infrastructure sector over the next five years.

“Rapid growth in the sector has also prompted tower companies to invest heavily in capex. The aggregate capex spend increased from Rs 8,000 crore in 2013-14 to Rs 10,200 crore in 2014-15. Net tower additions were also significantly higher at about 6,300 in 2014-15 vis-a-vis 3,200 in 2013-14,” the report noted.

Telecom tower companies are currently facing multiple fees and levies in the form of installation fee, annual renewal fee, sharing fee, etc. “Multiple fees being levied contribute towards higher costs of services for the telecom service providers, and in turn, to the subscribers,” it added.

India is the second largest mobile market with a billion subscribers at the end of February 2016, with 608.4 million urban subscribers and 443.5 million rural subscribers.