“Tower companies have reported massive tenancy losses over the past one and half years. For instance, the recent merger of Vodafone and Idea Cellular has resulted in over 57,000 tenancy losses,” Mumbai-based research firm said.
It expects a further reduction of nearly 21,000 tenancies in the first half of fiscal 2020.
“Telcos are currently focusing on densification of 4G networks. The replacement of 2G<\/a> and 3G BTSs with 4G ones will slow down net BTS additions to 1.55 lakh in fiscal 2020, against 2.75 lakh in fiscal 2019,” the study pointed out.
The firm also said that the exit penalties are expected to partially offset the revenue loss and the impact of tenancy losses is expected to spill over to 2020 fiscal.
Billionaire Mukesh Ambani-owned Jio’s disruptive foray in September 2016 has led to market consolidation that has reduced the industry<\/a> to a three private player market.
“The telecom sector moving towards an oligopolistic structure, with three players accounting for more than 90% market share, will pose challenges for tower companies,” Crisil in its study said.
The consolidation wave has reduced the number of players to about five as of 2019, from less than 15 players in 2012.
With telecom operators divesting in tower assets, the towers industry is expected to the shift to pure-play independent tower companies from the operator-led model, it added.
The Indus Towers-Bharti Infratel merger, expected to be completed by late 2019, is set to create the world’s second-largest mobile tower operator, with over 163,000 towers and 36% tower market share in India.
Post-merger, the industry will have three large players controlling over 70% tower market share.
The firm also added that the towers added by Bharat Sanchar Nigam Limited (BSNL<\/a>) and Reliance Jio account for a considerable share of captive towers, the revenue from these towers does not flow to the industry.
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