Huge investments required in the telecom sector to tap the potential of rising data demands
Despite a consolidation in the telecom sector, India needs around 100,000 additional towers to take care of the growing data and voice requirements. The country currently has about 461,000 mobile towers for a customer base of 1.18 billion.
If the figures are compared to China, which is the world’s largest telecom market, a totally different picture emerges. China has over 1.94 million telecom towers for a customer base of 1.4 billion. China Tower Corporation alone has about 1.9 million towers and the remaining 40,000 to 50,000 towers are owned by smaller firms. In contrast, the merged entity of Bharti Infratel-Indus, which is the world’s second largest tower company after CTC, will have a portfolio of 163,000 towers.
Sectoral regulator Telecom Regulatory Authority of India (Trai) has been raising the issue of insufficient investment in infrastructure as the reason for call drops, a charge refuted by telecom operators. The upcoming National Telecom Policy aims to garner an investment of $100 billion in the telecom sector in five years.
Why is this important
The telecom sector in India has a huge scope for growth as the country has touched only 30 per cent broadband penetration and 70 per cent of the growth still remains to be tapped. With the expansion of 4G, 5G, Artificial Intelligence, Virtual Reality, Internet of things and M2M etc, the country is set to witness a multi-fold growth of data which would needs huge investment in the sector.
Bharti Infratel to be positively impacted
Implementation of the National Telecom policy and other initiatives taken by the Government, to tap the humongous potential of data demand, is likely to benefit companies such as Indus towers and Bharti Infratel (CMP: Rs. 294, MCap: Rs. 54,498 crs, FY2020 PE: 22.1).