The telecom tower market is expected to grow at a compound annual growth rate of 6.04% over the forecast period to reach a market size of US$105.262 billion in 2026 from US$74.038 billion in 2020. Telecom Tower Market refers to the infrastructure provided by the telecom players under the private ownership, shared infrastructure service or as a joint venture to provide the services of connection or data to the wide audience. The telecom tower infrastructure carriers operated on the model of finding the property to install the tower at the reasonable price, having permits arranged and constructing the facility on the behalf of the telecom companies in return for a rent. This modus operandi has remained for a substantial period under the telecom tower space with the intent of increasing the customer base. The sector has witnessed growth in terms of service streams to mobile connections, broadband, internet and others. However, despite such advancements at the global level, As per IFC reports, there are 3 billion people across the globe remaining unconnected to the telecommunications. This calls for the last mile connectivity programs from telecommunications service and tower infrastructure providers.
With the change in the market dynamics, the telecom tower companies are now motivated to undertake the route of digital transformation with advancement in technology to 5G, growing competition, altering the tower specifications, and increasing rural markets customer base. Such changes have changed the towers to fibre telecommunications towers, active towers and data consoles. Upgraded the applications from simple telephone services, broadband to the running of e-commerce businesses and many more. However, there remain concerns over gaining permits and access to the construction of towers and lack of skilled labour to undertake the construction work.
Under the COVID-19 scenario, Even though the telecommunications sector declined in the initial lockdown phase but have revived eventually as the telecom tower has been a massive support for the extending the services to further run businesses online, enabling corporates to extend work from home opportunity, and keeping the individuals connected for medical support, and other necessities. For lockdown scenario, the tower market has taken brunt because the supply chain for the basic materials used for the installation of towers was disrupted, lack of skilled and unskilled labour due to migration, difficult to undertake maintenance operations and volatility across the markets incurring huge losses with the tower construction project delays. This rebounded as the customers shifted to online turning up the demand for telecommunications infrastructure by the 2020 year-end. The tower firms have witnessed demand from the newer areas as well which did not has connections before emerging as greenfield market. The revival of the tower industry under the revival scenarios is attributed to the exemption for a telecommunications tower under the containment zones, the shipping and the supply chain resumes at the year-end, and an adequate workforce willing to resume to work.
Favourable growth in data users leads to spectrum fragmentation increasing the demand for the towers
With the growth in the data users over the period, there is heavy dependence upon the limited spectrum outreach. This surged the requirement of the towers to provide the extended networks and make it accessible to all the users. The tower divides the range of the spectrum to make it available to the people. For instance, In India, Bharti Airtel, Reliance Jio Infocomm, and Idea Cellular have clubbed together with the tower infrastructure to create larger airwaves to speed up the data processing across a wide user base and further with the help of routing towers have extended the reach of the waves without disturbing the strength of the network.
Competition drive up the telecom tower market
The telecom tower sector is being competitive with the technological advancements driving favourable opportunities under merger and acquisitions among the industry players. To strive through the competition, the tower firms need to increase asset monetization to increase the revenues, completely tapping growth opportunities and revenue potential by extending the services beyond the traditional offerings, and honing upon the operations which show a credit on the fairness of revenue. For instance, In India, Bharti Infratel has decided to undertake a merger with the Indus Towers to become the world’s largest telecom tower company (outside China) with 1,69,000 towers.
FIGURE: GLOBAL TELECOM TOWER SHARE, BY type, 2020
Source: Knowledge Sourcing Intelligence Analysis, Sample Figure
Challenges in the Telecom Tower Industry
With providing infrastructural support and being the backbone of the communications sector, the telecom tower industry faces challenges such as restricting the installation of towers in the residential or nearby residential areas due to distrusts regarding its effects on health, this sometimes leads to authorities taking disruptive actions by halting the operational sites, frequent fibre cuts etc. the situation gets challenging with the reduction in the trained and skilled workforce which requires the technicians to climb the tower for maintenance purposes. For instance, In Noida, during the scaling up plans of Indus Towers for increasing the market bandwidth by installing towers have faced resistance from the segment of misinformed residents about electromagnetic field radiations emitted from the towers. Even though, the company have optimized the level as per the government and TRAI protocol.
Asian countries that consist of major emerging nations have remained ahead in terms of reduces the pricing of the data and making the communication affordable and accessible to all, with the bandwidth of over three million towers. China and India have the majority of the Asian market size with over 2.2 million tower facilities. The number of India and China facilities is more than Japan, Indonesia and Vietnam, Indonesia, South Korea combined. Indonesia has the market for the telecom tower firms which is witnessing growth in the telecommunications trend with over 7,000 towers with the majority from XL Axiata, Indosat. Considering the Asian market as a whole, Indus towers account for the majority with competition facing from American Tower, RITL and Bharti Infratel. Apart from Asian nations, Australia has a small number of tower providers with the majority under Telstra, Optus and Vodafone.