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Report

Wireless infrastructure sharing in India: market overview and forecasts


September 2012
Pankaj Agrawal and Sameer Gupta

Wireless infrastructure sharing in India: market overview and forecasts | i

Contents
1 2 3 4 5 6 Introduction Executive summary Tower sharing ratio is the key to economic model of a towerco Current tower sharing ratio for Indian towercos reflects 2G growth 3G/4G coverage and capacity will drive effective colocation Telco-owned towercos are well positioned to capture incremental colocation BTS 1 2 3 6 9 14 18 28 29 30 31

Appendix A: Data charts and tables About the authors About Analysys Mason Research from Analysys Mason Consulting from Analysys Mason

List of figures
Figure 3.1: Capex and opex recovery model for a towerco for calculating rentals [Source: Analysys Mason] 3 Figure 3.2: Illustrative site opex breakup for India and US [Source: Analysys Mason, 2012] ......................... 5 Figure 4.1: Wireless 2G subscriber base in India, FY2008 FY2012 [Source: TRAI, Analysys Mason] ....... 6 Figure 4.2: Minutes of usage per sub per month [Source: TRAI, Analysys Mason] ........................................ 6 Figure 4.3: Installed towers base by towercos,000 towers FY2012 [Source: Company reports, Industry inputs, Analysys Mason] .................................................................................................................................. 7 Figure 4.4: Colocation BTS by towercos,000 BTS, FY2012 [Source: Company reports, Industry inputs, Analysys Mason] .............................................................................................................................................. 7 Figure 4.5: Sharing ratio for telco-owned towercos, FY2012 [Source: Company reports, Industry inputs, Analysys Mason] .............................................................................................................................................. 8 Figure 4.6: Sharing ratio for independent towercos, FY2012 [Source: Company reports, Industry inputs, Analysys Mason] .............................................................................................................................................. 8 Figure 5.1: 2G and 3G subscribers network payload by circle category [Source: NSN Mbit index, August 2012] ................................................................................................................................................................. 9 Figure 5.2: Smartphone penetration, 2011 [Source: Analysys Mason, Industry inputs] ................................ 10 Figure 5.3: Share of data services in total revenue, 2009 - 2011 [Source: Analysys Mason, company reports] ........................................................................................................................................................................ 10 Figure 5.4: Indicative cell radius for 900 MHz and 1800 MHz spectrum [Source: Analysys Mason] ........... 11 Figure 5.5: Sites required to cover 1,000 sq.km dense urban area in different frequency bands [Source: Analysys Mason] ............................................................................................................................................ 11 Figure 5.6: BTS multiples for migration among frequency bands in dense urban areas [Source: Analysys Mason] ............................................................................................................................................................ 11 Figure 5.7: LTE deployment scenario [Source: Analysys Mason] ................................................................. 12 Figure 5.8: Total wireless SIM base in India, FY2008 FY2017 [Source: TRAI, Analysys Mason] ........... 13 Figure 5.9: Colocation BTS installed base in India [Source: Analysys Mason] ............................................. 13

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Contents

Wireless infrastructure sharing in India: market overview and forecasts | ii

Figure 6.1: Towers installed base and tower sharing ratio, FY2012 FY2017 [Source: Analysys Mason, 2012] ............................................................................................................................................................... 14 Figure 6.2: Telcos decision process of allocating colocation BTS to different towercos [Source: Analysys Mason] ............................................................................................................................................................ 15 Figure 6.3: SWOT analysis of telco-owned and independent towercos in India [Source: Industry inputs, Analysys Mason] ............................................................................................................................................ 16 Figure A.1: Total wireless SIMs in India FY2008 FY2017 [Source: TRAI, Analysys Mason] .................. 18 Figure A.2: Active wireless SIMs in India FY2008 FY2017 [Source: TRAI, Analysys Mason] ................ 18 Figure A.3: Installed tower base by towercos, 000 towers, FY2012 (total: 376k) [Source: Company reports, Industry inputs, company reports] .................................................................................................................. 19 Figure A.4: Colocation BTSs by towercos, 000 BTS, FY2012 (total: 640k) [Source: Company reports, Industry inputs, company reports, Analysys Mason] ...................................................................................... 19 Figure A.5: Industry revenue, FY2012 FY2016, INR billion [Source: Analysys Mason, 2012]................. 20 Figure A.6: Minutes of Usage (MoUs) per subscriber per month, minutes [Source: TRAI, Analysys Mason] ........................................................................................................................................................................ 20 Figure A.7: Construction cost of ground based tower in urban area, INR 000 [Source: Analysys Mason] .. 21 Figure A.8: Construction cost of roof top tower in urban area, INR 000 [Source: Analysys Mason] ........... 21 Figure A.9: Colocation BTS installed base by technology in India, FY2008 FY2017 [Source: Company reports, Industry inputs, Analysys Mason] ..................................................................................................... 22 Figure A.10: Telecom towers installed base and tower sharing ratio in India, FY2008 FY2017 [Source: Company reports, Industry inputs, Analysys Mason] ..................................................................................... 22 Figure A.11: Towers installed base by type of towercos in India, FY2008 FY2012 [Source: Company reports, Industry inputs, Analysys Mason] ..................................................................................................... 23 Figure A.12: Number of sites required to cover 1,000 sq. Km dense urban area at different frequency band [Source: Analysys Mason, 2012] .................................................................................................................... 23 Figure A.13: Data usage per active handset subscriber by technology, FY2011 FY2017 [Source: Analysys Mason, Industry inputs] .................................................................................................................................. 24 Figure A.14: Total data traffic from 2G and 3G handset SIMs in India (million GB), FY2011 FY2017 [Source: Analysys Mason, Industry inputs] .................................................................................................... 24 Figure A.15: 4G Data only SIMs (dongles and connected computing devices), million, FY2013 FY2017 [Source: Analysys Mason] .............................................................................................................................. 25 Figure A.16: Financial metrics of American Towers (US), 2009-2011, Market capitalization as of 6 September 2012: 28.31 bn [Source: Analysys Mason, Company reports] ..................................................... 25 Figure A.17: Financial metrics of SBA9, 2009-2011, Market capitalization as of 6 September 2012: USD 7.38 bn [Source: Analysys Mason, Company reports] ................................................................................... 26 Figure A.18: Financial metrics of Crown Castle (US), 2009-2011, Market cap as of 6 September 2012: USD 19.02 bn [Source: Analysys Mason, Company reports] ................................................................................. 26 Figure A.19: Financial metrics of TBIG (Indonesia), 2009-2011, Market cap as of 6 September 2012: USD1.96 bn [Source: Analysys Mason, Company reports] ........................................................................... 27

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About the authors


Pankaj Agrawal is the co-head of India office for Analysys Mason. He has significant operations, consulting and investment advisory experience in India, US and other emerging markets. Prior to joining Analysys Mason, Pankaj was an Engagement Manager with Deloitte Consulting and part of the telecoms strategy group with consulting experience in India and US. With prior national roles in revenue planning and pricing management for mobile business of the largest wireless operator in India, he has significant exposure to corporate planning & strategy formulation, including areas of network investments, operating plans, tender offerings, tariffs and new product introduction. He has also worked with the Department of Telecom as part of Indian Telecom Services and led field projects on switch and transmission network installation and maintenance. Pankaj was on the judging panel for the GSMA Global Mobile Awards 2011at the Mobile World Congress in Barcelona. Pankaj has an MBA from Indian Institute of Management Ahmedabad and a Bachelors of Engineering in Electronics and Communication from NIT. Sameer Gupta is Consultant at Analysys Mason. He has more than five years of experience in strategy consulting and investment advisory services and has worked on engagements in the area of due diligence, growth strategy, go to market planning, financial modelling, and benchmarking analysis. Prior to joining Analysys Mason, he with Deloitte Consulting and was part of Strategy & Operations team. Sameer holds a Bachelor of Technology (B.Tech) degree from the Indian Institute of technology (IIT), Bombay
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