CHENNAI: The fallout of a Vodafone Idea (VIL) collapse would ripple India’s telecom ecosystem and among those worst-hit would be telecom infrastructure companies.
Experts say that not only would such a collapse leave the over 180,000 tower tenancies currently occupied by VIL vacant, other players are unlikely to have re-occupied more than half of these even a year or two down the line.
According to ratings agency ICRA, VIL currently commands a tenancy share of around 35% and a revenue share of around 36% in the towers owned by four companies representing a majority of India’s tower capacity- Indus Towers, ATC Telecom Infrastructure, Tower Vision India, and Ascend Telecom Infrastructure. According to government data, there are over 6 lakh mobile towers in India.
Tower firms are aware of the threat. Indus Towers — the country’s largest tower company — has a high dependency on Bharti Airtel and Vodafone Idea, who rent a large portion of its infrastructure.
In its FY21 annual report, the company included the financial health of telcos as one of the threats. Noting that intense price competition, regulatory payouts including AGR dues, and spectrum payments have affected the financial health of operators, it pointed out that any deterioration in the financial health of its “largest customers, Bharti Airtel and Vodafone Idea, can affect their ability to pay for infrastructure services, which in turn could adversely affect Indus Towers’ revenues, cash flows and overall financial condition”.
ICRA’s Sabyasachi Majumdar, Group Head & Senior Vice President, notes that if VIL is removed from the equation, tower companies will lose around 1,80,000 tenancies.
Not all of this demand will be removed completely, however, since VIL’s 255 million existing subscribers would be picked up by rivals who would have to expand their own network capacities.