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Telecom Towers - India

August 2009

Executive Summary
Market
Estimated requirement of X,000 in 2008 and Y,000 by 2015 Projected growth rate of x% p.a. in 2008-2015 An estimated y% of towers are shared, which is expected to increase Telecom tower companies follow four types of business models:

Business models

Captive: Towers are owned & operated by telecom operators Operator Controlled: Operator consolidates tower infrastructure and hives it off as a separate company Pool and share: Operators jointly setup an independent company for sharing tower infrastructure Build and operate: Independent tower companies operate on a build-and operate model

Infrastructure sharing

Infrastructure sharing in India is currently limited to passive sharing Positive TRAI initiatives such as granting subsidies from its Universal Service Obligation Fund (USOF) encourage infrastructure sharing Estimates indicate significant improvement in profitability as tenancy ratio increases Indian telecom tower market includes:

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Competition

Tower infrastructure companies, owned and controlled by telecom-operator companies like Company A, Company B, Company C Independent tower infrastructure companies

Company A is the leading player with x% market share New entrants include American Tower Corporation, Tower Vision

Introduction Market Overview Business Model Infrastructure Sharing Competition M&A and PE deals Key Developments

TELECOM TOWERS INDIA.PPT

Demand for telecom towers is high to support a rapidly growing industry leading to emergence of lucrative tower businesses
Overview
The telecom tower market size in India is valued at INR XX bn in 2008 Types of towers
Ground-based tower Roof-top tower

Tower requirement estimates1


Towers (000s)
800 600 400 200

x% C D E

All leading mobile service operators are expanding and increasing their coverage by:
Increasing their network Increase coverage through tower sharing Using independent tower networks

Tower infrastructure is increasingly becoming independent of telecom operators The growing market for towers is also attracting the attention of private equity funds to invest in the companies

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2008 2009 2010 2011 2012 2013 2014 2015

Level of Tower sharing


Shared Towers

y%

x%

Unshared Towers

Source:

Tower infrastructure is the largest component of setup costs


Ground based tower (GBT)
Towers are erected on ground Height of the towers are in between x-y feet GBTs are ideally suitable for rural and semiurban areas Capex involved is in between INR x-y mn

Cost break up GBT


100% = INR X mn
Real estate z%

Roof type tower (RTT)

Towers are placed on roofs of buildings In terms of height these towers are shorter than GBTs RTTs are ideally suited for Urban areas and metros Capex involved is usually in between INR x-y mn
Source:

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Site setup y%

x%

Tower setup

Cost break up RTT


100% = INR Y mn
Real estate z%

Site setup y% x% Tower setup

Major telecom operators have hived off tower divisions into separate entities to benefit from favourable capital structure
Type of companies
Market is dominated by tower companies, owned or controlled by operators
Company A Company B Company C

Major tower companies in India


Independent tower company Operator-controlled tower company
Company A Company B
z% w% v% u% i% x% y%

Independent tower infrastructure companies (ITICs) are more recent entrants

New entrants
American Tower Corporation Ramboll Tower Vision Crown Castle

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Company C Company D Company E Company F

Company G

Company H j% Company I
k%

% indicates share of total towers

Source:

Thank you for the attention


The Telecom Towers report is a part of Research on Indias Telecom Industry Series. For more detailed information or customized research requirements please contact: Natasha Mehta, CFA
Phone: E-Mail: +65 8448 0449 natasha.mehta@netscribes.com

Gagan Uppal
Phone: E-Mail: +91 98364 71499 gagan.uppal@netscribes.com

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TELECOM TOWERS INDIA.PPT