The increase, caused by the spike in global oil prices, has taken the per litre rate of diesel to ₹109.59 in markets such as Delhi.
“Rising diesel prices will create near-term cost pressure, particularly for tower companies where diesel still forms a meaningful share of energy opex in rural and low-grid reliability areas,” said Vinish Bawa, partner and leader, telecom, at consultancy PwC India.
“In India, the impact of rising diesel prices is most pronounced in areas where telecom towers remain heavily dependent on diesel due to unreliable grid supply. Energy itself accounts for a significant share of the opex, and in such regions, diesel forms a substantial part of that mix. While it does not fundamentally alter the sector’s cost dynamics, it still results in a meaningful increase in opex,” said Siddhant Cally, research analyst at Counterpoint Research.
According to estimates from EY, telecom service providers spend about 30-40 per cent of their total network costs towards power and fuel, amounting to over Rs 30,000 annually.
With a 10 per cent increase in diesel cost, telcos should expect a Rs 600-700 crore increase in power and fuel costs, said Prashant Singhal, markets and telecommunications leader, EY India.
Telecom tower providers rely on diesel to run generator sets for powering telecom towers in remote locations where grid electricity is not available.
These generators are also used as a back-up power supply in rural locations where grid electricity is intermittent. This ensures continuous operations of telecom towers. Continuous power supply to telecom towers is crucial for voice and data connectivity, without which a mobile phone service will not work.
According to Counterpoint estimates, the sector’s diesel consumption hovers around 5-9 billion litres on an annual basis. India has over 854,662 towers as of mid-March as per data from department of telecom, called passive infrastructure, installed across the country, but not all are connected to grid electricity.
Brookfield-backed Altius Telecom Infrastructure Trust and Bharti group-backed Indus Towers are the largest tower companies in India. The duo holds bulk of the market share.
They lease spaces on towers to Reliance Jio, Bharti Airtel and Vodafone Idea for running their radio access network equipment which is referred to as active infrastructure.
The companies did not respond to queries from Business Standard as of Sunday evening.
Analysts, however, said diesel price hike may accelerate the shift towards green energy alternatives which has been ongoing for several years now.
Tower providers have been using solar cells, battery-powered and hybrid solutions to power telecom infrastructure. This reduces their dependence on fossil fuels.
“In regions with lower diesel dependence, the focus shifts towards maintaining network uptime through improved energy efficiency and more resilient power architecture. Rising fuel costs further reinforce the economic case for transitioning to hybrid and renewable energy solutions,” said Cally.
“The overall impact on the telecom sector remains manageable, with partial pass-through mechanisms and ongoing transition to renewables cushioning margins. Structurally, this will accelerate the shift towards solar, batteries and hybrid energy solutions across the telecom infrastructure,” added Bawa.
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Cost incurred on power, fuel
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Annually: over ₹ 30,000 cr
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On current hike: up by ₹ 600-700 crore
Source: EY India
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Diesel consumption: 5-9 bn litres annually
Source: Counterpoint Research
 "Telecom sector")