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Interview with ATC India's Amit Sharma

February 14, 2019
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The past one year has been a busy one for ATC India. The tower company has rapidly expanded its footprint through greenfield development as well as brownfield acquisitions. The company is also actively exploring new business opportunities in the areas of fibre, Wi-Fi and in-building solutions (IBS). Further, the launch of the National Digital Communications Policy (NDCP), 2018 will open up several growth avenues for the company. Amit Sharma, executive vice-president and president, Asia, ATC India, talks about the company’s growth strategies and focus areas. Excerpts…

How did the Indian telecom tower industry perform during 2018? What were the key trends?

The performance of the telecom tower industry is very closely aligned with the capex plans of telecom operators. We continued to see aggressive roll-outs by Reliance Jio Infocomm Limited and a somewhat subdued roll-out by Bharti Airtel. Vodafone and Idea focused on their merger.

The most significant development in 2018 was the consolidation at both the carrier and towerco levels. While the carrier consolidation resulted in the market having four serious players, the towerco consolidation will result in two or three big companies and two smaller ones.

With data consumption per subscriber showing no signs of abating, fibre to the tower has become absolutely essential. This is one trend, which, I think, has moved from being an emerging one to the need of the hour.

In all, we saw one of the most eventful and challenging years in telecom during the past decade.

What were the key business highlights for ATC India during the year?

After the successful integration of Viom Networks in 2017, ATC closed two more tower transactions of about 20,000 towers with Idea and Vodafone. We were able to successfully integrate these two portfolios in 2018 itself.

From a business standpoint, we were able to garner a disproportionate share of business. However, carrier consolidation and the resultant churn posed significant challenges to the industry as a whole, including for ATC.

What are your views on the ongoing consolidation in the telecom space, in terms of opportunities and challenges?

The industry has seen very significant capital investments over the past two decades and, as happens with any sunrise industry, the telecom sector too had 12 operators some years back. With increasing competition, we have seen consolidation, which has resulted in the count of operators coming down to four. The market, with three private sector players and one public sector player, presents a fair degree of competition from a global perspective and, we think, this is the right industry size for a country like India. Any further consolidation may work against the consumer as well as the tower industry.

Similarly, we had over 10 towercos until a few years back but the number has now come down to four – with two big and two small players. This is likely to  consolidate further to a few large towercos in future.

What are some of the new businesses that ATC is exploring?

Data traffic is virtually exploding, leading to large requirements for fibre, IBS and small cells. The government plans to develop 100 smart city projects, where internet of things (IoT) will play a vital role. NDCP 2018 envisages attracting investments worth $100 billion in the telecom sector by 2022. ATC plans to be present in all segments of telecom infrastructure, as long as it makes prudent business sense.

What are the various opportunities presented by government initiatives such as the Smart Cities Mission and Digital India for the tower industry? How is ATC India leveraging these?

The government has come out with NDCP 2018 with a focus on taking forward its Digital India initiative. The policy focuses on telecom infrastructure development in the areas of optic fibre cable (OFC), Wi-Fi, IBS, distributed antennae systems (DAS) and smart cities. ATC is actively working in all these areas to develop the communication layer and we have also been engaging with various state governments, municipalities and utility companies to identify opportunities in this regard.

What are the key challenges that plague the telecom sector and the tower industry, in particular? How can these be addressed?

The requirement for multiple approvals and clearances continues to be a key challenge in the ease of roll-out. This industry is still seen as a soft target for revenue generation – with very high right-of-way (RoW) charges, and ad hoc and arbitrary charges being levied at the local municipality/state level - thus leading to avoidable litigation and delays in roll-outs. There continues to be poor adherence to the RoW guidelines issues by the Department of Telecommunications (DoT).

While the government has taken initiatives to provide access to government land and buildings for tower installations, these initiatives have been sporadic at best and more work needs to be done on this front.

Giving preferential electricity connections and tariffs (for example, industrial tariff) to tower sites will help us contain the cost of running the sites and make services more affordable for the end-consumer. Further, security of critical telecom infrastructure on the ground needs to be mandated by the central and state governments, much like railways and electricity infrastructure. Another long-standing request of the industry has been to provide input tax credits for telecom infrastructure.

What are your views on NDCP 2018? Do you have a policy/regulatory wish list?

The government has fast-tracked reforms in the telecom sector and continues to be proactive in providing room for growth for telecom companies. We think NDCP 2018 is a progressive and forward-looking policy. However, the key lies in implementation and converting the intent to deliverables and action on the ground.

What are your views on the sector’s readiness to launch 5G services? What will be the role of towercos?

While we see the technology developing very fast, for a successful nationwide 5G launch, capital will be a key challenge for most operators. The telcos need to turn profitable and have a healthy operating margin to be able to continue investing in future technologies.

Towercos will continue to play a critical role in providing telecom infrastructure for successful 5G deployment. We see significant opportunities in terms of developing the communication layer spread across fibre, small cell, poles and DAS.

What will be ATC’s key focus areas and growth plans for 2019?

The focus will be on leveraging operational benefits from consolidating our various acquisitions in the recent past and improving our operational excellence is a continuous process, which we will continue doing. As we look at strengthening and growing our core business of anchor, co-location and upgrades, the major thrust in 2019 will be on the fibre business.

Going forward, what will be the key growth drivers for the Indian telecom tower industry?

Wireless data growth will continue to be a key driver for the next couple of years, until we reach stable penetration levels. In parallel, we will see increased deployment of infill sites, indoor solutions and Wi-Fi hotspots along with the roll-out of 5G, IoT and machine-to-machine, which will fuel the industry in the medium to long terms. All of this obviously, will require a strong fibre strategy. In addition, the recent announcement by interim finance minister Piyush Goyal on the government’s plan to build 100,000 digital villages in the next five years will have a positive impact on the telecom infrastructure sector.

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