Tower growth may hit a plateau as 5G nears completion
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Mumbai: As telecom companies such as Reliance Jio and Bharti Airtel near completion of 5G network expansion and curtail capital expenditure and tower rentals fall, tower companies are likely to see flattish growth in the next five years, with Vodafone Idea 's 5G rollouts and 4G coverage expansion likely to offer short-term support, according to analysts.Net new tower additions fell to 25,000 in 2024-25, the lowest since 2017-18, and are expected to dip further in this financial year, according to data from ICICI Securities. It comes after industry towers saw a deceleration in growth to 3.5% in the previous fiscal after a robust 8.1% annual expansion since 2016-17.Net additions of 5G BTS, or radios, which constitute a large part of network capex, also nosedived, to 8,000, just into the third year of 5G rollouts, from 141,000 in 2022-23. This indicates a conspicuous drop in 5G capex despite 5G BTS accounting for only 15.8% of the total. In contrast, 4G BTS' plunged after seven-eight years of rollouts.Hence, analysts expect a lull for telecom tower companies in the next five years, as significant tower or BTS additions are likely only when telecom operators buy new spectrum bands to deploy 6G."5G is being deployed only on two spectrum bands - 700MHz and 3300MHz - implying industry BTS/tower should start stabilising," ICICI Securities said in a research report. "In the future, as 4G gets re-farmed, existing 4G spectrums and BTS would be deployed for 5G; therefore, keeping BTS/tower unchanged."Out of the nearly 800,000 telecom towers in India - the second largest in the world after China - about 275,000 are run by Brookfield-backed Altius Telecom Infrastructure Trust (formerly Data Infrastructure Trust), which counts telecom market leader Reliance Jio as its largest tenant. Around 250,000 are run by Indus Towers , which is majority owned by the country's second-largest telecom operator, Bharti Airtel, while other major tower companies include GTL Infrastructure , with 26,000 towers, and Ascend Telecom, with about 18,600 towers.India's telecom sector capex has materially declined since 2022-23, when 5G rollouts started. While Reliance Jio was most aggressive in the first two years of rollout, Bharti Airtel's capex was calibrated over four years. Meanwhile, Vodafone Idea, which has just started its 5G rollout and 5G network expansion, is unlikely to move the needle on tower additions to that extent."After a good rollout by Bharti (Airtel) in last couple of years, we expect Bharti's tower adds to be in the range of 5-8K (down from an estimated 15,000-20,000 in the past two years)," BofA Securities said in a recent report. "We also expect industry tower adds to slow as 5G would require lesser traditional towers/more small cells, even as business from Vodafone Idea will remain strong for next 2-4 quarters."Credit research firm India Ratings has given a weak outlook for tower companies in this fiscal, as tenancies have continued to decline and margins have remained flat. Tower rentals fell sharply to '69,000 per tower per month in 2024-25 from '85,000 in 2021-22, data showed.
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