Hard times call for drastic measures. Rival telecom tower firms, including Viom, Indus and American Tower Corporation, are now collaborating in a bid to cut costs and improve efficiencies.
As part of this partnership, the tower companies share business opportunities from potential clients with one another.
For example, if tower company A gets a call from an operator for 100 towers in Bihar and if there's another tower company that has better presence in that State, then the business is passed on to that company.
They have also begun using common contractors and resources to manage operational expenditure for towers located in a contiguous region.
Break from the past
This is a complete change from just a few years ago, when tower companies would cut down on rentals and fight hard for the same operator's business even if it meant rolling out new tower sites.
“The focus has now changed from adding towers to improving the efficiency of existing towers,” said Mr Umang Das, Director-General, Tower and Infrastructure Providers Association (TAIPA).
The change has been forced upon the tower companies by the troubled business environment that has hit the telecom sector post 2010. Most of the tower companies had put their bets on fresh network rollouts by new 2G players. Viom, for example, runs the entire tower network for Uninor. Another new player, Etisalat DB, had signed a Rs 10,000-crore deal with Reliance Infratel.
But now the rollouts have come to a standstill with the Supreme Court cancelling all the 2G licences issued in 2008. In addition, 3G rollout by incumbent operators has not picked up pace which, in turn, has brought down the demand for new towers. Mumbai-based GTL Infra, for instance, is expecting a 6 per cent revenue hit on the exit by 2G players. Reliance Infratel, which has been in talks for selling stake to private equity players, has been forced to rework its valuation
“The tower industry, once a lucrative business, is now under pressure due to recent events affecting telecom operators. A collaborative approach will help,” says Mr Das.
Unified licensing
Regulatory issues are also plaguing the tower players. TRAI has proposed to bring tower firms under the unified licensing regime, which will force them to pay revenue-share to the Government. “There is no logic in bringing tower firms under the unified licence, which is meant for telecom companies that want to offer services,” says Mr Das.
All this has brought the tower industry to a grinding halt. While 40,000 new towers were added in 2009-10, this year there has seen no additions so far. “If this continues, just a partnership will not work. The only way forward is to have a formal merger,” said a Mumbai-based tower company.