3 minute read 7 Feb 2022
Digital InfraCo – unlocking the tower power

Digital InfraCo – unlocking the tower power

By Prashant Singhal

EY Emerging Markets Technology, Media & Entertainment and Telecommunications (TMT) Sector Leader

Spearheads growth strategy in rapidly converging Technology, Media and Telecommunications (TMT) ecosystem.

3 minute read 7 Feb 2022

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  • Digital InfraCo - unlocking the tower power

In India, sharing of Infrastructure will play a key role for cost-effective rollout of digital infrastructure to turbo-charge data-driven transformation of the society.

In brief

  • Digital infrastructure is foundational to India’s digital economy and its future competitiveness, with significant potential value to realize over the next 3-5 years. Favorable regulations and policies are the catalyst for infrastructure development.

Towercos in India

The tower infrastructure segment has been the backbone of a rapidly evolving nation that is riding high on the digital transformation wave. Today, digital has touched every aspect of the society and has set in motion significant socio-economic development in the country. In the next few years, India will transform into a completely digital society.

Investment to the tune of INR1.8t–INR2.2t is required over next 3–4 years in setting up the underlying digital infrastructure

This makes it imperative for towercos in India to evolve and offer larger end-to-end digital infrastructure by strengthening their core services, exploring adjacencies, and serving new customer segments. 

Towercos are best placed for deploying cost-effective digital infrastructure

Towercos’ ability to seamlessly manage a decentralized asset base positions them favorably to capitalize on various adjacencies. Success in the digital era hinges on efficiently utilizing an infrastructure sharing model owing to the capital-intensive nature of the communications sector. The very structure of the tower infrastructure segment in India is conducive for Towercos to transition to a shared digital infrastructure player. It will help reduce operating cost, minimize time-to-market, optimize asset utilization, quickly adopt new emerging technologies, and cater to the changing customer needs. It is no longer about owning a single asset class but about strategically playing a part across the digital infrastructure value chain. Towercos need to transform themselves and be the facilitator of this infrastructure.

The new age Digital InfraCos have unique opportunities for growth, to embrace new business models, increase innovation and launch new targeted services.

Opportunity radar: new growth model for Digital Infracos

Opportunity radar: new growth model for Digital Infracos

TowerCos in India: Strengthening the core

Towercos in India can play a significant role in the deployment of fiber. The revenue opportunity for Towercos is between INR180b–INR270b by 2025.  Another lucrative opportunity for Towercos will be in deploying small cells, catering to the growing network densification requirements.

Exploring adjacencies to help transition to a Digital InfraCo

Towercos are well positioned to expand their infrastructure portfolio, tapping into adjacencies to cater to the changing needs of end customers. Inherent strengths of towercos make them strategically placed to capitalize on new revenue streams — pan-country presence, huge fleet on the ground, real estate connects, streamlined processes, power management capabilities and a decentralized asset base. This presents significant opportunities for towercos to foray into adjacent service offerings by utilizing their existing infrastructure/assets.

Tower sites are ideal to serve as micro data centers owing to steady power supply and fiberized backhaul. Towercos in India can capitalize on this growing opportunity. India’s ambitious Electric Vehicle (EV) adoption target by 2030 will necessitate setting up a robust charging infrastructure. Tower sites can double-up as EV charging points, maximizing asset utilization. In addition, towercos have acquired significant expertise in site acquisition and negotiation with owners. As a result, they can help set-up dark stores for e-commerce companies.

Pivoting customer base

The advent of 5G in India is expected to bring new players in the industry. Towercos have the chance to cater to these new customers by offering a range of infrastructure services. In addition, increased need for satellite ground stations, driven by proliferation of low earth orbit (LEO) satellites, will position towercos to cater to entire communications infrastructure needs for these stations.

A conducive regulatory environment is needed to maximize potential of Digital InfraCos

Addressing some of the regulatory bottlenecks faced by towercos/Infrastructure Providers-I (IP-I) will go a long way in helping them transform into a “Digital InfraCo”. For instance, the shared infrastructure business model reduces operating costs by avoiding duplication of infrastructure by multiple service providers. However, the current regulatory environment does not allow towercos to take the shared infrastructure provider business path. In addition, adoption of new technologies and data-heavy applications will require further densification of telecom infrastructure/ network throughout the country. Currently, there are no provisions in place for facilitating deployment of in-building solution (IBS), small cells, cell-on-wheel, aerial cable, street furniture, etc. RoW policies need to be suitably amended or updated to reflect the changing market dynamics. Further, property tax should be rationalized across all States to ease working capital woes of IP-1s.

Key considerations

Active infrastructure sharing

Enhance scope of IP-I players to include active network sharing

Legal enforcement of RoW Rules

Need to enforce mechanism for Indian Telegraph RoW Rules Nov’2016 on Central Ministries/ Depts and State/ Local Authorities

Policy for use of street furniture (electric poles etc.) for small cells

Make necessary amendments to the Indian Telegraph RoW Rules Nov’2016 for installation of IBS, small cells, poles, cell-on-wheel, aerial cable, street furniture etc.

Rationalization of property tax across States

Property tax rates need to be rationalized and made uniform across all States.

Availability of power on 24*7 basis at industrial tariff

Need for priority of electricity connections to telecom tower site at affordable industrial tariff instead of commercial rates

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Towercos are expected to play a key role in deploying the digital infrastructure in the country. Deploying fiber and small cell infrastructure are the immediate opportunities. The pan-India assets of towercos can be optimally utilized in offering a number of adjacent services such as edge computing, EV charging, space for dark stores All this will only be possible through a forward-looking policy/regulatory framework that addresses current challenges of towercos and at the same time sets the tone for new growth opportunities.

About this article

By Prashant Singhal

EY Emerging Markets Technology, Media & Entertainment and Telecommunications (TMT) Sector Leader

Spearheads growth strategy in rapidly converging Technology, Media and Telecommunications (TMT) ecosystem.