With a pan-India play, Essar Telecom Infrastructure has completed around 2,000 sites and plans are to complete 6,000 by FY '08. "The company is focusing on circles like Maharashtra, Mumbai, Gujarat, Tamil Nadu, Kerala, Andhra Pradesh, Madhya Pradesh, UP (E), UP (W), Bihar, Orissa, and Rajasthan," says Ajay Madan, CEO, Essar Telecom Infrastructure.

IMIL is a part of Independent Mobile Infrastructure, Mauritius. The company has a two-fold strategy for the Indian market. The first strategy is to own, operate, and lease passive infrastructure, and the second, to acquire passive infrastructure and lease it back.

IMIL is actively supported by investment bankers, private equity players, and high networth individuals. It is actively looking at a pan-India play, but is not willing to share its plan and strategy.

There is a second category of IP-1 players whose focus is on limited circles, as they are not looking at pan-India operations initially. The companies include TowerVision, Aster Infrastructure, and XCEL Telecom. TowerVision is focusing only on three circles-Karnataka, Haryana, and Punjab. "The company has built up around 800 sites and plans are on to build around 1,200 by December 2007," says Amit Ganani, CEO, TowerVision. Aster Infrastructure is also focusing on three circles-Karnataka, Punjab, and Andhra Pradesh. As per industry information, New Silk Route Private Equity (NSR), Mauritius has bought 72.5% stake in Aster Infrastructure for Rs 232.58 crore. NSR is picking up stake in three tranches. In the first tranche, the company has bought 32% and the other two tranches will be 17% and 23.5% respectively. It is also one of the seven buyers that bought 5% stake in RTIL for $337.5 mn.

XCEL Telecom is presently operational in two circles and the third circle is expected to be operational in a month's time. Sandip Basu, managing director and CEO, XCEL Telecom, says that to start with, the company is planning to have a run rate of 50 towers per circles a month, and plans are to scale it to 100 towers per circle a month in the next three months.

The Success Mantra
The Indian market is big. But, is it big enough to accommodate more than a dozen players? If one looks at the market, there are three tower subsidiaries of which two are already formed, whereas the third is in its formation stage. There will be some more additions on the tower subsidiary front.

To be successful in the Indian market, both tower subsidiaries and IP-1 players have to focus on significant reduction of Capex and Opex for the given set of towers vis-à-vis operators' Capex and Opex on a standalone basis. Not only this, operators have to share towers with as many operators as possible to keep rentals significantly lower vis-à-vis standalone players.

It is good to know that Reliance Telecom Infrastructure and Bharti Infratel have been formed for creating value. Both these companies will start with a large number of towers under their belt. For instance, on day one, RTIL had 14,000 towers, whereas Bharti Infratel will have around 50,000 towers when the company comes into existence. And, by the end of this fiscal, RTIL will have around 40,000 towers whereas Bharti Infratel will have around 65,000 towers. The numbers are impressive and will take Bharti Infratel and RTIL to be the number one and number two players worldwide, since the number one player, American Tower, has only 22,000 plus towers. In order to be at par with American Tower on the tenancy front, both companies have to focus a lot on increasing the tenancy ratio, and this would not be easy considering the fact that they come from the operator background, where neutrality is a big question mark. It would be interesting to see how the two will ensure independent operations without divesting majority shareholding in the beginning. Divestment is the only path both companies can follow, since more independence means more prosperity for tower subsidiary. And, the earlier they do, the better it is in terms of tenancy ratio and better valuation for tower subsidiary. Since the barometer of success of any player working in the infrastructure sharing space is its tenancy ratio, the greater the tenancy ratio, higher the valuation.

"To provide independence to Bharti Infratel, we will have a minority position by diluting our equity and induction of private investors," says Akhil Gupta. "Within 2-3 years, we would like to list the company," he adds.

Speaking on neutrality, Ramesh Venkat, group president, Finance and Treasury, Reliance ADA Group says, "We will keep an arm's length, and the contract between RTIL and Reliance Communications would be the same vis-à-vis other operators and RTIL." The company says that it is neutral and independent, and will increase the tenancy ratio.

Page(s)   1  2  3  4