Akhil Gupta, esteemed Chairman of both Bharti Infratel and of the Tower And Infrastructure Providers Association of India (TAIPA), reprised his role as keynote speaker at the 3rd Annual TowerXchange Meetup Asia, hosted in December 2016. While being Chairman of Asia’s benchmark listed towerco, Mr Gupta is also a Director of India’s leading MNO, Bharti Airtel, so his vision includes that of both infrastructure provider and tenant. Here are the highlights of Gupta’s keynote speech.
Gupta congratulated TowerXchange on hosting the premium event for the global tower industry, recognising the year on year growth of the community. More importantly, Gupta led the audience in applauding towercos, MNOs and their suppliers for the creation of the tower industry, a new infrastructure asset class with listed entities totalling a global market cap of US$125bn, of which almost US$25bn comes from Asia, with significant future IPOs in the pipeline. “The tower industry is becoming mainstream,” Gupta remarked.
Gupta described the robust, unique towerco business model in Asia and reiterated his vision for the “disarmament of the MNOs” – offering modern, reliable infrastructure under tariffs such that MNOs have no choice but to lease shared infrastructure rather than build or buy their own infrastructure.
In his 2016 keynote, Akhil Gupta chose to highlight three great opportunities for towercos and infrastructure providers for the coming year:
1. Specific prioritised adjacent growth areas
2. How to tackle energy
3. Access to capital
Specific prioritised adjacent growth areas
Driven by the data explosion, hundreds of thousands of micro sites will be needed as Asia migrates to 4G and eventually 5G.
While Gupta was pleased to see Asian towercos diversifying into the provision of these lighter sites, he noted that some MNOs are still self-deploying micro sites. Gupta re-iterated his call for towercos to step up and completely disarm the operators, offering rapid deployment at a price where it makes no sense to build their own sites. “If MNOs have built their own sites,” suggested Gupta, “we should buy them.” Gupta also called on technical teams to design micro sites with capacity for two tenants.
“Towercos must not just provision outdoor infrastructure, but must offer white label service in building solutions.”
With more than 80% of data traffic generated indoors, Gupta called on industry colleagues to commit to a vision to provide coverage in virtually every building over 10-20,000sqft. This service should be provided by towercos on a white label basis: towercos should never compete with their customers.
“I see Wi-Fi and IBS as a virtually endless opportunity, but if we yield this space, someone else will occupy it,” added Bhati Infratel’s Chairman. “This is the year we really need to step up our efforts as an industry, and make this a mainstream activity of all towercos. Towercos must become the owners of indoor Wi-Fi infrastructure.”
I see Wi-Fi and IBS as a virtually endless opportunity, but if we yield this space, someone else will occupy it
Alongside micro sites, Wi-Fi and IBS, the third piece adjacent growth area highlighted by Gupta was transmission.
“Most shared towers can feasibly be connected to fibre within the next two years,” said Gupta.
Initially towercos should link towers to the nearest transport network – whomever that may belong to – and to buildings in which they provision Wi-Fi. But later the focus should shift to shared microwave, inter and intra-city long distance fibre and ultimately even international long distance infrastructure.
Fibreising sites enables MNOs to take microwave dishes off towers, freeing space for an extra tenant. “I believe there is a great opportunity for us to become tower and transmission companies,” concluded Gupta.
How to tackle energy
“Provision of energy at the right cost is a mainstream responsibility for towercos in India and in other Asian countries where power is not dependable. Provision of energy is also the most complex activity we provide – yielding little or no margin under the traditional pass through model,” opined Mr Gupta.
The imperative to reduce energy opex has stimulated investment in energy efficiency solutions, resulting in the introduction of the fixed energy model. This has motivated Indian towercos to invest significant management time into negotiating energy charges.
Gupta called on stakeholders to work out a model where, after providing for depreciation of energy equipment, any profit from energy efficiency programmes should be transparent, and should shared with the customer, thus taking away much of the tension which currently characterises annual negotiations.
“We could virtually eliminate diesel… if we’re able to work out a common win-win formula to share benefits between towerco and customer,” concluded Gupta.
Access to capital
Whilst MNOs in Asia and worldwide continue to be capitally constrained, access to capital remains a key issue for towercos.
The capitally intensive nature of the micro site, Wi-Fi and IBS, and transmission opportunities, and the investment required in renewables, energy storage and grid extensions, require that stakeholders work together, and make it imperative for towercos to devise feasible tariff plans that both ensure their business case and ensure MNOs don’t find it more economic to self-deploy.
To optimise the investibility of infrastructure providers as an asset class, Gupta called for consolidation among sub-scale towercos to improve their access to capital, while the Bharti Infratel and TAIPA Chairman also called on towercos of scale to consider listing to facilitate easier access to capital.
Gupta concluded by re-emphasising the need for collaboration to unlock these opportunities and the associated capital, commending TowerXchange for providing a forum for the exchange of experience and ideas.
