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Gaining Momentum

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VoicenData Bureau
New Update

To get rid of non-core activities and to focus on their core businesses,

operators have started making use of infrastructure sharing. Not only does this

help operators in reducing capex and opex, it also helps them in reducing

management bandwidth for non-core activities.

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The IP-1 players, for whom infrastructure sharing is a core area, have to

focus on doing all the things-RF planning, site acquisition, site preparation,

soil survey, municipal clearances, pollution clearance, site construction, power

connection, battery backup, air conditioning, shelter, cable tray-right. These

IP-1 players charge a monthly fee. Now, the Department of Telecom's new

guidelines, which permit sharing of active infrastructure, have given a new

impetus to this business.

Service providers are hiving off their towers into separate subsidiaries to

unlock shareholder value and focus on core competencies. It will take around 3-6

months to put the structure in place before the rollout begins. Hiving off also

helps the subsidiary as they can start with a sizable number from day one.

Key Players



This year, Bharti Airtel hived off its tower business to form a subsidiary,

Bharti Infratel. Bharti Infratel now owns, deploys, and manages passive

infrastructure for Bharti. The company has 52,865 towers out of which 33,590 are

ground-based and the rest 19,275 are roof top-based. As of now, Bharti has made

investments to the tune of Rs 10,621 crore on its infrastructure business and

this business contributed 2% to Bharti's total revenue in FY 2007-08.

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Also, Bharti Infratel is partnering Vodafone and Idea to form Indus Towers.

Indus Towers will have 70,000 sites from this partnership across sixteen telecom

circles in India.

Bharti Infratel will also operate passive infrastructure in the remaining

seven circles of Assam, Bihar, Himachal Pradesh, Jammu & Kashmir, Madhya

Pradesh, North East, and Orissa.

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The other big player is Reliance Infratel. It has a total of 36,849 towers

out of which 23,434 towers are ready for use. Out of this, 18,379 are GBT and

rest 5,055 are roof top based. Its prime customers are Reliance Communications

and Reliance Telecom. Recently, Reliance Infratel filed a draft with Sebi for

its upcoming IPO. With this IPO, the company is planning to install 16,000

towers at a cost of Rs 4,623 crore.

Quippo Telecom Infrastructure, a 100% subsidiary of Quippo Infrastructure

Equipment, in the last two years, has developed a portfolio of 4,500 towers in

twelve circles.

Last year, Quippo Telecom added 3,500 towers to its kitty. Its customers

include Bharti, Tata, Reliance, Vodafone, MTNL, and Idea. Quippo also got Spice

as its new customer last year. Spice and Quippo entered into a deal where Quippo

would be the sole owner of Spice Towers, and it holds the exclusive rights to

roll out any further requirements for Spice. From this acquisition, the

infrastructure company expects to roll out around 12,000 towers in the next two

to three years.

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GIL is part of GTL and has been focusing on the telecom turnkey space for a

long time. GIL has an experience of executing 16,000 sites connecting 16 mn

subscribers.

XCEL Telecom, another independent tower company, is the first to make an

intra-sector buyout in the independent infrastructure space. It bought Tics

Telecom, a Punjab-based tower company. The Essar Group is also very active in

the market.

Outlook



Infrastructure sharing may be new to India, but it's a standard practice

globally. Though tower sharing has not been very successful in most European and

Asian countries, experts believe India will do a US, because no other country in

the world has twelve operators. To meet the target of providing 500 mn

telephones by 2010, nearly 3.3 lakh towers will be required in the next three

years.

Gyana Ranjan Swain



gyanas@cybermedia.com

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