TowerVision is a start up owned by UK-based shareholders, led by the Fore Group. Fore Group (formerly known as Elgadcom Group) is a private holding and investment company whose portfolio includes tower management and cellular operators.

XCEL Telecom is promoted by Q Investments, a Texas-based strategic investment firm, for providing shared telecom infrastructure services to leading operators in the country.

Presently, Quipo is focused on contiguous circles like Punjab, Haryana, Delhi, Uttar Pradesh (E), Uttar Pradesh (W), Madhya Pradesh and non-contiguous states like Karnataka. Going forward, in FY ’07-08, the company plans to expand in Gujarat, Rajasthan, Andhra Pradesh, Tamil Nadu, Bihar and West Bengal.

On the other hand, Essar Telecom Infrastructure has so far focused on circles like Tamil Nadu, Kerala, Maharashtra, and Mumbai and has now commenced operations in Andhra Pradesh, Karnataka, Chennai, Madhya Pradesh, Uttar Pradesh (E), and Uttar Pradesh (W). It will commence operations in Bihar, Orissa and Rajasthan in April 2007.

GTL is focusing on six circles of Maharashtra, Gujarat, Goa, Madhya Pradesh, Karnataka, Uttar Pradesh (E), Rajasthan, Punjab, Delhi and Mumbai. It plans to expand in 20 circles within six months.

Essar has completed more than 600 sites till date, and work on 200 sites is in progress. The company plans to close FY ’06-07 with 750 sites and plans are on for adding another 6,000 sites next year, so as to close the year with an installed base of 6,750 sites by FY ’07-08. On the other hand, GIL is planning to rollout 1,200 sites by March 2007 and 6,700 by March 2008. Quipo’s vision is to be the largest infrastructure service provider globally; plans are on for 40,000 towers by 2011. It has, till date, installed around 1,000 sites. TowerVision has completed around 500 sites and plans to complete 10,000 sites by 2010. The company is also looking at inorganic growth and plans to acquire IP-II players or tower subsidiaries of operators as and when they are available for equity. In toto, the company is planning around 30,000-40,000 sites by 2010. XCEL plans to rollout 2,000 towers by FY ’07-08 and is also looking at the acquisition route. Initially, the focus is on two circles and by March 2008, the company plans to rollout operations in six circles.

In terms of contract, Essar has signed agreements with Idea, Bharti, Hutch, Tata and BPL and is in discussions with Aircel, Spice and Reliance. Quipo has signed anchor agreements with Bharti, Idea and Spice; it plans to sign a co-locator agreement with other operators. The company has signed master service contracts with Spice, Bharti, and Idea and plans to achieve a tenancy ratio of 1.9 users per tower. TowerVision has tied up with four operators and is presently focusing on three clusters—Northern, Central and Southern circles. GIL’s strategy involves a mix of greenfield rollouts, acquisitions, and client-centric alliances. Quipo is focusing on customer centricity and continuous innovation, whereas Essar is focusing on providing delivery on time, quality of service and guaranteed uptime.

In order to have an edge, Quipo is focusing on sourcing, reverse auctioning, green eco based shelters, and renewable sources of energy for reducing capex and opex. For improving sourcing, Quipo’s R&D team is placed in China and the Western countries. For supply chain management, the company has deployed Microsoft Dynavision.

On the other hand, Essar has opted for project management software called PRIMAVERA. It has taken initiatives to build towers and shelter manufacturing through its sister concern.

In terms of investment, Quipo had invested more than Rs 250 crore by March 2007. GIL has invested around Rs 1,000 crore and plans are on to invest Rs 2,030 crore by March 2008. Till date, Essar has invested around Rs 150-200 crore and is planning a further investment of Rs 1,200 crore by March 2008. The company has project approvals for 3,000 sites by IDFC and is willing to fund part of the project. TowerVision is looking at an investment of US $500 mn till 2010 and is in the final stages of funding. XCEL Telecom plans to have a US $2-2.5 billion war chest over the next three to five years.

THE CHALLENGES
Being a nascent industry, infrastructure sharing needs a lot of support from service providers as well as the government .Service providers have to work more in a partnership model and not as a customer-vendor relationship, as success and failure of the infrastructure sharing player will have an impact on the service provider’s success. The government’s role in the growth of this industry can be manifold. First, infrastructure sharing players do not fall under infrastructure or telecom players. So, they do not get any tax benefit under Section 10 23 (G) and 80 (i). They can’t even avail of a tax holiday, as these companies don’t fall under the infrastructure category and were not formed before 2005. For this reason, they do not get long term funding at a lower rate of interest either.
Second, TRAI has extended infrastructure sharing benefit also for backhaul—that is, fiber and microwave connectivity between MSC and BTS, as it helps in optimum utilization of existing fiber and microwave capacity. Later, TRAI can think of extending it even for passive infrastructure, at least for rural areas initially.
Third, single-window clearance will help in setting up towers at a fast pace. Common directives or guidance for all states can also help in smooth flow of erecting towers.
Infrastructure sharing players have to focus on expansion and automation. There is enough for all three players, plus others, as and when they plan to enter the market. Cellular services have been growing at the rate of 57% in revenue and 74% in subscription terms, which makes enough room for growth for infrastructure sharing players.

Pravin Prashant
pravinp@cybermedia.co.in