Telecom freeze: Tower firms look at other revenue options bl-premium-article-image

Thomas K Thomas Updated - November 21, 2017 at 03:52 PM.

Offer to act as contact points for various Govt schemes in rural areas

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With telecom roll outs down to a trickle, tower infrastructure firms are looking to other business opportunities to shore up revenues.

Tower firms, including Viom, are in talks with Government agencies to co-locate projects such as the Common Service Centres and the UIDAI.

“Tower companies have access to power in rural areas and also have space at the tower locations. We are offering this to Government-funded schemes for a fee,” said Mr Umang Das, Director General, Tower and Infrastructure Providers Association (TAIPA), told

Business Line .

For example, the Common Service Centre scheme envisages reaching e-governance projects to the rural areas. The Government has approved the scheme for providing support for establishing one lakh Common Services Centres in six lakh villages of India.

Infrastructure located

Tower companies have already located infrastructure in most of these villages which now they want to offer to such schemes. The UIDAI scheme, for instance, has been initiated with the objective of reaching a number of services to rural folks, especially financial schemes such as the National Rural Employment Guarantee Act (NREGA). Tower sites can be used as the point of presence in villages for implementing such projects.

This has been almost forced upon tower companies by the troubled business environment that has hit the telecom sector post 2010.

Fresh network

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 six 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.

Tower firms are also collaborating in a bid to cut costs and improve efficiencies. As part of this partnership, they share business opportunities from potential clients with one another. They have also begun using common contractors and resources to manage operational expenditure for towers located in a contiguous region.

Changing focus

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 Das.

TRAI’s proposal

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,” said 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.

>tkt@thehindu.co.in

Published on June 19, 2012 15:59