India is one of the biggest and most fluid wireless markets in the world.
To put it into perspective, India has a population of 1.33 billion people, second only to China’s nearly 1.4 billion but in a land mass that is just one-third that of China’s.
There are an estimated 1.14 billion mobile phone subscribers in the country, roughly 3.5 times the U.S. tally.
Four major carriers serve 99 percent of these subscribers. The largest, Reliance Jio, owned by Jio Platforms, has 34 percent of the market with 393 million subscribers. Airtel (Bharti Airtel) and VI (Vodafone Idea) hold 28 and 27 percent shares, respectively.
Government-owned BSNL-MTNL and niche players together make up the 11 percent balance.
Serving such a large mobile customer base in such a densely populated country requires a lot of infrastructure.
The India tower installed base comprises roughly 454,000 towers, about three times the 150,000 communications towers in the U.S. Five major tower companies, mainly spin offs from India’s wireless carriers, operate and manage these assets.
Now the Indian tower business is undergoing a realignment.
Bharti Infratel, the only publicly held towerco and Bharti Airtel’s prime infrastructure provider, generates revenues of about $2 billion a year. In its 2Q20 report, the company showed it owns and operates 95,800 towers of which 42,340 are standalone across 11 telecom circles in India.
The other 53,460 towers come from Indus Towers, a joint venture between Bharti Infratel, Vodafone Group and Vodafone-Idea, in which Bharti Infratel holds a 42 percent equity interest.
Note that the Department of Telecommunications divides India into 23 telecom circles or service areas classified as A, B, C and Metro that include major cities – Delhi, Mumbai, Kolkata and Chennai. Within each circle, a call is treated as a local call. Between circles, it becomes a long-distance call.
Bharti Infratel and Indus Tower are merging to form the world’s second largest tower company behind China Tower. (see, China Towers’ Towering Global Presence). The new Indus Towers will operate and manage over 200,000 towers.
In a separate deal, Canada’s Brookfield Infrastructure acquired from Reliance Industries a portfolio of approximately 135,000 newly constructed towers that form the infrastructure backbone of Reliance Jio’s telecom business.
Reliance Jio is NewTowerCo’s anchor tenant under a 30-year Master Lease Agreement that assures long-term revenues. These towers enable Reliance Jio’s 5G rollout with most of the towers connected by fiber.
To meet new services growth demand, NewTowerCo plans to build-out its portfolio to 175,000 towers over the next three to five years.
Reliance Jio has gained subscribers in recent months, mainly at VI’s expense, on the strengths of its 4G LTE buildout and significant investments in Jio Platforms by big tech companies and private equity firms.
Through a series of acquisitions, U.S.-based American Tower operating as ATC India now is the third largest tower company in India with nearly 75,000 towers serving all four major wireless carriers. The company expects to build about 5,000 towers in India in 2020.
Understand the tower business in international markets like India is markedly different from developed countries like the U.S. For instance, Bharti Infratel reported 2Q20 carrier co-locations averaging 1.82 per tower. Overall, tower companies in India average 1.9 tenants per tower compared to about 2.4 in the U.S.
Bharti Infratel’s monthly leasing revenues per were nearly $1,100 with monthly revenue per tenant of under $600. In the U.S., tower leasing revenues run four or more times these rates.
Similarly, American Tower reported 2Q20 U.S. property revenues of nearly $1.1 billion on a base of 41,013 towers while its ATC India subsidiary produced property revenues of $271 million from 74,693 towers.
This is not to say the India tower market is unappealing.
On the contrary, offsets include lower construction material costs along with lower installation and maintenance labor rates compared to the U.S. Moreover, mobile data demand is increasing dramatically. In turn, carrier ARPUs are rising, thus yielding better cash flows.
Expect even more towers to deliver new 5G services to India’s huge wireless customer base.
By John Celentano, Inside Towers Business Editor