Telecom Infrastructure Challenges

The existing telecom infrastructure would not suffice because the subscriber base would be 500 million by 2010. In order to serve this market we would require approximately 330000 towers by 2010 as per Cellular Operators Association of India (COAI). As of today we have just 110000 towers in place. Thus, there is a huge gap that needs to be filled as the currently tele-density in India is in the range of 20-25%.
The upcoming challenges:
• Procedural Delays – there are approximately 40 clearances that are required prior to setting up a site. In India there is no scheme of exemption or single window clearance that would assist in tower execution. Thus the gestation period is very long thereby increasing the uncertainty and the financial burden on any party that builds the tower.
• Fund Raising – given the capex requirement fund raising in itself is a big exercise. Thus a constant hunt for creative finanacing is a time consuming and significant task.
• Absence of Tax benefits – there are no tax benefits available to the telecom infrastructure sector though it is in alignment with govt. and TRAI objective of enhanced tele-density and increades penetration in rural as well as urban areas. These challenges are common to carriers (Bharti, Reliance etc.) as well as independent tower companies. However the one challenge below in only for carriers.
• Sustainability – setting up infrastructure in circles B and C is significant and these two circles are recording the maximum growth in subscriber base. As compared to that the ARPU ( avg. revenue per user ) is comparatively lower in these circles. Thus a major challenge is to incur huge capex on building infrastructure in these locations and surviving on lower returns.