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Transcript of Report- Telecom tower industry - TELECOM TOWER INDUSTRY ... Bharti Infratel BSNL Reliance Infratel...

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    REPORT- TELECOM TOWER INDUSTRY

    Moving towards data growth

    The telecom industry has grown over the years considerably and with

    the exponential data growth, the roll out of 3G/4G networks and with

    few initiatives taken by the government, the telecom industry will see a

    higher growth trajectory in the future. This document gives a brief

    analysis of the Small and Medium Enterprises in the telecom industry

    and contains the assessment of the key success factors, opportunities,

    industry trends, challenges, technological changes faced and much more

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    Table of Contents

    About the author .............................................................................................................................................................. 3

    Executive Summary ........................................................................................................................................................... 4

    Telecom Infrastructure Overview ..................................................................................................................................... 5

    Industry Structure ............................................................................................................................................................. 7

    Industry Trend ................................................................................................................................................................... 7

    Geographical distribution of major manufacturers .......................................................................................................... 9

    Industry exports .............................................................................................................................................................. 10

    Recent Developments ..................................................................................................................................................... 11

    Government Initiatives ................................................................................................................................................... 11

    Opportunities for SMEs: .................................................................................................................................................. 12

    Challenges for SMEs: ....................................................................................................................................................... 13

    The Way Forward ............................................................................................................................................................ 14

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    About the author

    Sohini Deb has 14 month of work experience in automationin TCS. She has keen interest in Marketing and Operationsarea and is currently pursuing MBA from InternationalManagement Institute (IMI) New Delhi. She did BTech inComputer Science from WBUT.

    Kumar Rishi is a Post Graduate in Marketing from IMTGhaziabad and a Mechanical Engineer from ThaparUniversity, Patiala. He has experience in auto componentindustry and market research.

    Ashwani Kumar holds wide experience helping SMEsgrowth in Steel & Automotive Component industries usingOperational excellence, LEAN & Six Sigma concepts. He is agraduate from IIM Rohtak with a Mechanical Engineeringbackground from IIT Delhi and currently running SookshmManagement Consulting Firm catering to SMEs.

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    Executive Summary

    In developing countries, telecom sector plays an important role in not only contributing to the growth and GDP of

    the country but also connecting corners across the country. In India, the tele - density has reached 84.09% by

    September 2016, leading to better connectivity and social benefits for the people of the country. Tele density is the

    total number of telephone connections per hundred individuals living in an area. For India with a population of 1.311

    billion, reaching 84.09% tele-density by 2016 displays huge growth in the telecom sector.

    With the rapid growth of the telecom sector, there has been a rapid change in the business models too making it

    more dynamic in nature. The increased competition amongst the mobile operator companies has forced them to

    make it their priority to increase subscriber base, thus focusing more on marketing and services. Their next focus

    was network expansion, making the tower companies natural partners to the mobile operator companies. The

    telecom tower industry grew at a high pace and became the backbone of the telecommunication sector.

    The mobile operator companies, by partnering with the telecom tower companies could not only focus entirely on

    increasing their subscriber base but also reduce their capital expenditure costs significantly. The needs of the

    operator companies were clear:

    Lower energy cost

    Faster time to market

    Easier penetration to unknown terrains

    The tower industry has grown over the years considerably with a total size of 400,000 telecom towers currently and

    is growing at a rate of 4-5% CAGR over the last 5 years. With exponential data growth, the roll out of 3G/4G

    networks, and increased competition amongst the operator companies, the tower industry including both the bigger

    players and the small and medium enterprises, will see a higher growth trajectory in the future. Other than these,

    opportunities like higher smart-phone penetration, internet penetration, government initiatives like Digital India

    will also help the tower companies to grow further in future.

    Along with opportunities, there are few challenges too, the SME sector of the tower industry faces. Challenges like

    consolidation of operators, resulting in reduction of tenancy ratio, or the usage of alternative technologies like Wi-Fi

    hotspots and small cells to offload traffic. Though these threats are not so huge in nature, yet it would impact the

    growth of the tower companies in the future averaging out the growth rate.

    Considering Indias data revolution, we at Sookshm believe that the following key aspects are critical to the positive

    growth of the tower industry in the future,

    High usage and limited spectrum availability

    Quality of service

    More focus on operational optimization and prudence than tenancy

    Data growth and traffic offloading

    Green Towers

    Roll out of newer technologies like small cells or Wi-Fi hotspots

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    Telecom Infrastructure Overview

    Telecommunication has emerged as an important

    aspect of economic and social development in an

    increasingly knowledge intensive global scenario. The

    Indian telecommunication sector has about 1 billion

    subscribers connected through 4, 00,000 towers and

    is the worlds second largest telecom market, after

    China. According to the joint report published by the

    Department of Industrial Policy and Promotion and

    the Department of Telecom, the mobile sectors

    contribution to GDP which is presently at 6.5 percent

    will increase to 8.2 percent by 2020.

    Below are the constituents of a mobile network-

    Diagram-1: Mobile network Constituents

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    The above diagram shows the main constituents of a

    mobile network. The SMEs in the telecom industry

    deal with either the passive network, which is the

    non- electronic infrastructure containing only the

    steel towers, power supply options, generators or the

    active infrastructure containing all the components of

    the passive infrastructure with radio wave

    equipments, switches, antennas, transceivers etc

    Size and growth rate

    India has a total of 400,000 telecom towers and will

    be growing at a rate of 4-5% over the next 4-5 years.

    Though there is a decline in growth of voice, yet with

    the increase in data explosion the tower industry will

    experience huge growth in deployment of tower and

    tenancies. Indus is the largest tower company in India

    with a total of 85,000 towers. If we see the industry

    average tenancy ratio (tenancy ratio is the number of

    telecom operators per tower), it is 1.77 and for

    independent tower players, that is excluding

    BSNL/MTNL, it is 1.93.

    According to Macquarie Capitals Chirag Jain, Indias

    data consumption will grow 12 times by 2020 from

    the current levels on account of a sharp fall in data

    tariffs and rise in smart phone penetration. This will

    lead to higher tenancies for tower companies as

    operators rapidly roll out 4G services in parallel with

    their existing 2G set-up and expanding 3G networks.

    And moreover, given the stiff competition among the

    telecom operators, tower companies are expected to

    be major beneficiaries as telecom companies intensify

    their data rollout to counter Reliance Jio.

    Indian tower industry market-

    The following chart (fig-1) provides a snapshot of current tower infrastructure assets with various industry players

    0.0%

    5.0%

    10.0%

    15.0%

    20.0%

    25.0%

    30.0%

    35.0%

    40.0%

    IndusTowers

    BhartiInfratel

    BSNL RelianceInfratel

    ViomNetworks

    GTL O