The Growth Prospects Of The Indian Telecom Tower Industry

The Indian telecom tower industry is poised for tremendous growth in the coming years because of the introduction of new technologies and the network expansion by telecom operators. This article assesses the challenges and changing dynamics of the country’s telecom tower industry.

- Shruti Mishra

Around the globe, telecommunication services are regarded as one of the key drivers of a country’s socio-economic development. In India, mobile telephony has seen staggering growth in the past one decade. According to the India Brand Equity Foundation (IBEF), India is currently the second largest market for telecommunication services globally, with a subscriber base that is reaching the one billion mark. One prime segment aligned with the growth of the telecom sector is the tower industry.

The strong focus on operational excellence, the data explosion, the rollout of data services like 4G and 5G and higher penetration in rural areas are the main reasons behind the accelerating investments in India’s telecom tower sector. In 2017, Indian firms invested around US$ 14.7 billion in mergers and acquisitions (M&A) in this sector (which is five times more than what was invested in 2016). This signifies that the Indian tower industry is looking beyond conventional business models and is keeping itself updated with recent technological advances. The Indian government’s Digital India and Smart Cities initiatives are also fuelling the demand for a robust tower infrastructure.

The current landscape

At present, approximately 460,000 telecom towers are installed in India. Industry experts think that the demand for towers will grow at a rate of 3 to 5 per cent a year, with the stiff competition between service providers forcing telecom operators in India to switch from trying to increase their subscriber base to improving the user experience of their current customers. On account of the expansion of 4G networks and the onset of 5G technologies, ICRA (a Moody’s investor service firm) has pointed out that telecom tower tenancies have grown at a CAGR of 5.5 per cent over the last four years, while the growth in rentals has been nominal.