Market Research Report : Telecom Towers in India 2012

Telecom Towers in India

March 2012

Executive Summary

Drivers:

Market

Drivers &

Challenges

� In FY 20--, x1 telecom towers were added, taking the total no. of towers in the country to x2

� In terms of revenue, domestic market size of telecom towers is estimated at INR x3-x4 bn

� The market is expected to grow at a CAGR of x5% in revenue and x6% in earning till 20--

Challenges:

�Challenges faced in rural set up

� Increasing Pollution and Radiations

�Growth in Wireless Subscriber Base

� Emergence of Solar Power as a Positive

Source of Energy

� Introduction 3G and Upcoming Cellular

2TELECOM TOWERS IN INDIA 2012.PPT

Trends & Developments

Competition

� Trend1

� Trend2

�Development1

�Development2

Major Players

Bharat Sanchar Nigam Ltd. Bharti Infratel Ltd. GTL Infrastructure Ltd.

Indus Towers Ltd. Reliance Infratel Ltd. Viom Networks Ltd.

� Introduction 3G and Upcoming Cellular

Technology

� Spectrum Scarcity

•Introduction

•Market Overview

•Scope in India

•Drivers & Challenges

•Major Telecom Tower Companies


•Major Telecom Tower Companies

�Other Telecom Tower Companies

•Mergers & Acquisitions

•Trends & Developments

•Strategic Recommendations

•Appendix

Introduction

Telecom Industry Overview

Indian telecom sector is the x1 largest sector in the world and x2 largest among the Asian emerging

economies

The telecommunication sector in India has been the major contributor to the country’s growth,

accounting for around x3% of the total GDP in FY--

Telecommunication Industry


SAMPLE Source:

Sub-Vertical1 Sub-Vertical2 Sub-Vertical3 Sub-Vertical4 Sub-Vertical5

• Sub-Vertical3 consists of service deployment facilities and equipments

• Telecom towers are one of the prime components of Sub-Vertical3

• India being an enormous country with rapidly increasing colossal subscriber base across the country,

deployment of telecom towers will be essential to reach every corner of the nation

• Telecom towers can be broadly categorized in two types, type1 and Roof Type Tower

Demand for telecom towers is high resulting in a rapidly growing

industry and emergence of lucrative tower business

• Growth in mobile subscribers in India over the last few years has created huge opportunities for the telecom infrastructure industry

• In FY 20-- alone, x1 telecom towers were added, taking the total no. of towers in the country to x2

• In terms of revenue, market size of telecom tower vertical is estimated at INR x3-x4 bn, which excludes reasource1 and reasource2 billing

� The market is expected to grow at a CAGR of x5% in revenue and x6% in earning till 20--

• All leading mobile service operators are expanding and increasing their coverage by increasing their network, increase coverage through tower sharing and using independent tower networks

• The growing market for towers is also attracting the attention of vertical1 to invest in the companies

Market Overview – India


• The growing market for towers is also attracting the attention of vertical1 to invest in the companies

• The commercial terms between the tower company and its tenants are governed by Master Service Agreements (MSA)

Source:

Telecom Tower Requirements - India

Towers (‘000s)

1.500

1.000

500

0

+30%

20--e20--e20--e20--e20--20--20--20--

Note: The figures are for the respective financial years

Market share of Telecom Tower Companies - India


SAMPLE • Company1 holds majority of the telecom tower market in India

• The major y1 companies hold around y2% of the market

• Rest of the y3% market is shared by various specialty1 and specialty2 owned

tower companies

Source:

Player7Player6Player5Player4Player3Player2Player1

Infrastructure sharing takes place at two levels – level1 and

level2

level1 level2

• aaaaaaaaaa

• bbbbbbbbb

• ccccccccccc

• aaaaaaaaaa

• bbbbbbbbb

• ccccccccccc

Types of Infrastructure Sharing


Source:

X X

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Benefits of Infrastructure Sharing

SWOT Analysis of Telecom Tower Sharing in India

SWOT

Strengths

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Weaknesses

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SWOT

Analysis

Opportunities

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Threats

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Source:

Drivers & Challenges – Summary

Drivers

Growth in Wireless Subscriber Base

Challenges


Growth in Wireless Subscriber Base

Introduction 3G and Upcoming

Cellular Technology

Spectrum Scarcity

Emergence of Solar Power as a

Positive Source of Energy

Challenges faced in rural set up

Increasing Pollution and Radiations

Public: Domestic Company – Company1 (-/-)

Company Information Offices and Centres – India

Corporate Address

Adress line1

Adress line2

City. Country

Tel No. +91- --- - -----

Fax No. ++91- --- - -----

Website www.------.com

Year of Incorporation 19--

Ticker Symbol ------

City Name

Head Office


Key People

Products and Services

Stock Exchange Exchange1

Category Products/Services

Primary Products

•Passive Infrastructure Solutions

•Tower Operations Center

•Infratel Enterprise Suite

•Advantage Infratel

•Shared Infrastructure

Name Designation

Mr. X Chief Executive Officer

Mr. Y Chief Financial Officer

Mr. Z Chief Operating Officer

Head Office

Source:

• The company incurred a net profit of INR a1 mn in FY 20--, as


Financial Snapshot Key Ratios

Financial Summary

Net Profit/LossTotal Income

0

50

100

150

0

2

4

6

8

Profit

INR mn

Revenue

INR mn

20--

c4

20--

c3

20--

c2

20--

c1

Particulars y-o-y change

(2011-10)2011 2010 2009 2008

Profitability Ratios

Operating Margin 2.23 0.74% -1.49% -9.59% -10.70%

Net Margin -34.74 -35.26% -0.51% 1.00% -37.12%

Profit Before Tax Margin -53.05 -53.57% -0.51% -25.32% -12.44%

Return on Equity -10.93 -11.06% -0.14% 0.21% -5.79%

Return on Capital Employed 0.18 0.06% -0.12% -0.55% -0.48%

Return on Working Capital 78.72 77.98% -0.74% 0.18% -3.99%

Return on Assets -2.26 -2.29% -0.04% 0.05% -1.56%

Return on Fixed Assets -2.88 -2.94% -0.06% 0.09% -2.98%

Cost Ratios

Operating costs (% of Sales) -2.95 99.22% 102.16% 112.14% 113.76%


• The company incurred a net profit of INR a1 mn in FY 20--, as

compared to net profit of INR a2 mn in FY 20--

• The company reported total income of INR a3 mn in FY 20--,

registering an increase of a4 per cent over FY 20--

• The company earned an operating margin of a5 per cent in FY 20--,

an decrease of a6 percentage points over FY 20--

• The company reported debt to equity ratio of a7 in FY 20--, an

increase of a8 per cent over FY 20--

Key Financial Performance Indicators

Indicators Value (--/--/20--)

Market Capitalization (INR mn) 10,985

Total Enterprise Value (INR mn) 87,544

EPS (INR) 48.39

PE Ratio (Absolute) 66.9

Improved DeclineSource:

Operating costs (% of Sales) -2.95 99.22% 102.16% 112.14% 113.76%

Administration costs (% of

Sales)1.04 18.03% 17.00% 15.75% 18.00%

Interest costs (% of Sales) 20.57 63.33% 42.77% 45.59% 29.69%

Liquidity Ratios

Current Ratio -54.82% 0.82 1.81 4.42 7.13

Cash Ratio -96.41% 0.19 5.34 2.99 5.66

Leverage Ratios

Debt to Equity Ratio 45.86% 3.82 2.62 2.92 2.72

Debt to Capital Ratio 6.85% 0.75 0.70 0.72 0.71

Interest Coverage Ratio 124.52% 0.01 -0.05 -0.27 -0.46

Efficiency Ratios

Fixed Asset Turnover -9.25% 0.08 0.09 0.07 0.06

Asset Turnover 18.69% 0.06 0.05 0.04 0.03

Current Asset Turnover 5.19% 0.47 0.45 0.11 0.07

Working Capital Turnover -308.15% -2.08 1.00 0.14 0.08

Capital Employed Turnover 58.09% 0.29 0.19 0.16 0.12


Key Business Segments Key Geographic Segments

0%

50%

100%

20-- 20-- 20--20--

0%

50%

100%

20-- 20--20--20--

Product1 Product2 Product3 India Outside India


Key Information

Description Details

Overview

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Operations• It owns, deploys, and manages telecom towers & communication structures for telecom operators as

well as wireless service providers

Source:

SAMPLE

Some Other Telecom Tower Companies (-/-)

Business Highlights

• aaaaaaaaaa

• bbbbbbbbb

• Its products include telecom towers, transmission towers, substation structures, monopoles and high masts, windmill towers, broadcast

towers, and telecom shelters

• It serves customers in telecom, transmission and distribution, and special structures markets

• ccccccccccc

Company2


SAMPLE Company3

Business Highlights

• aaaaaaaaaa

• bbbbbbbbb

• It offers Build-Operate-Lease services to design, acquire sites, procure and build the passive infrastructure for cell sites

• ddddddddd

• eeeeeeeeee

• Also an independent provider of passive telecom infrastructure, offering tower space and active electronics space to multiple operators at

its owned sites

Source:

Mergers & Acquisitions (20-- - 20--)

Announced Deal Type Target Buyer/Investor(s) Seller(s) Deal Size (INR) Status

Month, 20-- Acquisition Target1 Buyer1 Seller1 x1 bnCompleted/

Expected

Month, 20-- De-acquisition Target2 Buyer2 Seller2 x2 bnCompleted/

Expected

Month, 20-- Merger Target3 Buyer3 Seller3 x3 bnCompleted/

Expected


Month, 20-- Merger Target4 Buyer4 Seller4 x4 bnCompleted/

Expected


Expected


Expected


Expected

Source:

Trends & Developments

Introduction of

Biometrics in

Education

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• bbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbb

• ccccccccccccccccccccccccccccccccccccccccccccccccccccc

Introduction of

Biometrics in

Education

Trend1

Biometric ID Cards

for Public

Transportation




Biometric ID Cards

for Public

Transportation

Trend2


Source:

Development2




Biometrics

Application in

Customs




Development1

Strategic Recommendations (-/-)

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Strategic Recommendation1

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Strategic Recommendation2

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Source:

Appendix

Ratio Calculations

Operating Margin(Operating Income/Revenues)*100

Net Margin (Net Profit / Revenues) *100

Profit Before Tax Margin(Income Before Tax / Revenues *100

Return on Equity (ROE) (Net Income / Shareholders Equity)*100

EBIT / (Total Assets – Current

Ratio Calculations

Current RatioCurrent Assets / Current

Liabilities

Cash Ratio

{(Cash & Bank Balance +

Marketable Securities) / Current

Liabilities)}

Debt to Equity Total Liabilities / Shareholders

Equity

Debt to Capital Ratio{Total Debt / (Shareholders

Equity + Total Debt)}


Return on Capital (ROCE) EBIT / (Total Assets – Current Liabilities)*100

Return on Working Capital(Net Income / Working Capital) *100

Return on Assets (Net Income / Total Assets)*100

Return on Fixed Assets (Net Income / Fixed Assets) *100

Operating Costs (% of Sales)(Operating Expenses / Sales) *100

Administration Costs (% of Sales)

(Administrative Expenses / Sales) *100

Interest Costs (% of Sales) (Interest Expenses / Sales) *100

Equity + Total Debt)}

Interest Coverage Ratio EBIT / Interest Expense

Fixed Asset Turnover Sales / Fixed Assets

Asset Turnover Sales / Total Assets

Current Asset Turnover Sales / Current Assets

Working Capital Turnover Sales / Working Capital

Capital Employed Turnover Sales / Shareholders Equity

Thank you for the attentionTelecom Tower in India report is a part of Research on India’s Telecommunications Series. For more detailed information or customized research requirements please contact:

Kalyan BangaPhone: +91 33 4064 6215

E-Mail: [email protected]


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