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Top three telcos expected to grab 94% revenue market share by 2020: Crisil
In addition, there will be a loss in tenancies of smaller players such as Aircel and Telenor as they, too, hang up.
The ongoing consolidation in the telecom sector is a "threat" to tower companies, which are staring at a margin contraction of up to 7.5 percentage points by FY20, as operators exit co-locations, as per a new report by rating agency Crisil.
According to a report the Indian telecom industry has consolidated into six players and is expected to reduce to four by 2023 and the revenue market share (based on gross revenues) of top three players are expected to reach 94 percent by fiscal 2020, up from 67 percent in fiscal 2018 (already at 90 percent in the first half of this fiscal).
Largest telco Vodafone Idea is in the process of exiting as much as 27,500 co-locations or 3 percent of the telecom masts industry post-merger and will be looking at closing more, in the near term. In addition, there will be a loss in tenancies of smaller players such as Aircel and Telenor as they, too, hang up.
It said the ongoing price war in the telecom industry led to stressed financials at telcos and expedited consolidation/exit. Telcos are exercising options such as asset sales. This includes selling their standalone towers or reducing stake in existing tower subsidiaries to pare debt. This, in turn, is changing tower dynamics.
Crisil also pointed out that the rental per tower is expected to decline 7-9 percent owing to the co-location exits and lower tenancies.
In fiscal 2019, however, rent revenue per tower is estimated to decline 7-9 percent, owing to loss of tenancies of Vodafone Idea and other smaller telcos.
The towers will not have the bargaining power to levy the forgone opportune rental (from the exit of tenancies) on the existing ones as the telcos' financials are already stressed. We believe the trend of Reliance Jio setting up its captive towers would also add to the pressure of telecom tower operators exerting pressure on rental growth, Crisil added.
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99,999
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1,29,999
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69,999
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41,999
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64,999
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99,999
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29,999
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63,999
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39,999
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1,56,900
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79,900
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1,39,900
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1,29,900
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65,900
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1,56,900
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1,30,990
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76,990
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16,499
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30,700
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12,999
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62,425
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1,15,909
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93,635
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75,804
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9,999
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11,999
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3,999
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2,500
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3,599
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8,893