Moody’s forecasts brisk growth for India, Indonesia tower firms - Mobile World Live

Moody’s forecasts brisk growth for India, Indonesia tower firms

05 APR 2016

Telecoms tower companies in India and Indonesia are the most developed in Asia and are expected to see revenue expand 8-10 per cent annually over the next one to two years, according to Moody’s.

“We expect continued growth in both markets as mobile operators, building out and strengthening their 3G and 4G footprints, will seek to lease tower space and sell more of their own towers,” said Nidhi Dhruv, a Moody’s analyst.

M&A and consolidation are likely in both markets during the next two to three years. Mobile operators are looking to sell their towers and use the proceeds to fund capex and reduce debt because — for them — there is a limited strategic benefit to owning towers versus leasing them, Dhruv noted. “Purchasing these towers will help independent operators achieve scale and a competitive edge through expansion of their geographic footprints.”

In a recent report Moody’s said Indian tower companies have significantly larger scale compared with their Indonesian counterparts. India, which has a much larger population and number of mobile subscribers, has more than five times the number of towers in Indonesia. However, in Indonesia independently owned tower operators are more prevalent, owing to more supportive regulations.

“In contrast to Indonesian companies, Indian tower companies have stronger operating metrics and balance sheets but lower profitability,” said Moody’s associate analyst Maisam Hasnain. “Indian companies also have higher tenancy ratios, but their reported EBITDA margins are lower owing to higher fuel costs as well as lower tower rental rates.”

India has a more supportive regulatory framework for investing in tower companies. Indonesia does not allow foreigners to own towers directly, but they can own shares in publicly listed companies that own shares in tower companies. India allows up to 100 per cent foreign ownership of tower companies, but regulators have proposed reducing that level to 74 per cent.

The approval process for the deployment of new towers is complex and time-consuming in both countries.


Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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