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MOSL: TELECOM-Densification of network to continue; Tower capex to realign with lesser tenants/towers

Telecom: Densification of network to continue; Tower capex to realign with lesser tenants/towers, pricing could see pressure

 

We met a senior telecom expert working in the tower industry to understand the current issues in the entire telecom network space. Below are some key takeaways:

• The huge hype surrounding 5G, massive MIMO technology and small cells seems to have lost steam. While 5G is still a good five years away, the huge MIMO deployment has not picked up well, while small cells have limited utility.
• Increasing 4G network densification via site addition across players should support tower industry growth, but rental rates will come under pressure when contracts come up for renewal. The capex/tower is also reducing with a capacity of 2-3 tenants v/s the earlier 4-5 tenants.
• New investments should grow; fiberization is growing but its monetization model has not evolved yet. Demand for IBS is also on the rise.
• Competition for Bharti Infratel is expected to increase. ATC (American Tower Company) has grown rapidly with Vodafone and Idea’s independent tower acquisition. Also, RJio too is in the fray with recent tower, fiber hive-off plans.