The wireless operators in India have announced massive investments to augment the current infrastructure and install new networks.

There are various factors that are driving the growth in the market. These include:

● Expansion by incumbent operators like Idea and Aircel has raised the current average to seven in majority of circles. Idea has set up operations in four new circles, and Aircel in five new circles, during the year. The government owned operator BSNL, has begun to adopt a more liberal attitude toward sharing. Hence, it is likely that BSNL's tower capacity procurement will be done from independent tower companies.

● New Operators: Five new operators received pan-India licenses in CY08. Out of which, only Shyam Telelink started its operations, in four circles and is likely to commence services in the other circles this year. Two other new players have been able to get a strategic partner in place and are likely to launch their services by the end of CY09.

● 3G: The increasing data application need of the subscribers has triggered the launch of 3G networks in the country. While the government owned operators have launched 3G services, the 3G rollouts of private players will happen post the auction of 3G licenses. For effective coverage, operators will need one 3G BTS for every two 2G BTS. The high 3G license fees expected to be paid by the operators will make sharing an unavoidable option for the operators to start their rollouts.

● Rural expansion: As part of their long term strategy, the operators are continuously expanding their network footprint in semi urban and rural areas where nearly 70 percent of India's population resides. Shared infrastructure offers a ready solution by reducing the expenditure incurred by the operator on deploying and maintaining the infrastructure.

On the market and technical trends in the telecom towers market

Encouraged by the success of passive infrastructure sharing, last year the Government of India allowed sharing of active network infrastructure by operators. This measure is expected to expedite network rollout, especially in rural areas. The operators are expected to migrate towards an operating model inherent with both passive and active sharing arrangements in the future, to derive the maximum benefit from sharing. Hence, tower companies will have to collaborate with technology providers, to enhance their shared infrastructure offerings.

The development and growth of the telecom industry in India is directly related to the growth in the wireless subscriber base. During the financial year 2008-09, the wireless telecom subscriber base in India registered a y-o-y growth of 50.1 percent and touched 391.9 million. The increased usage of cell phones is driving wireless penetration in the country. The wireless penetration of India was almost 37 percent at the end of FY09. Additionally, minutes of usage per subscriber increased from 464 min at the start of CY08 to 496 min at the end of it. The‚ 'Minutes of Use' is expected to continue its increasing trend, driven mainly by innovative tariff schemes, lifelong validity plans, and bundled services introduced by the major wireless carriers. The introduction of low cost handsets has also made wireless telephony more affordable for the lower income group giving further impetus to the subscriber growth in Class B and C circles.

In order to support and service the anticipated growth in demand of telephony, the wireless operators in India have announced massive investments to augment the current infrastructure and install new networks. The investments are targeted mainly towards rolling out cell sites to support 2G centric voice services and next generation technologies such as 3G and mobile WiMAX.

On future outlook

The demand for telephony in India is expected to remain robust in the coming years. The future demand for wireless broadband is anticipated to grow rapidly in the country. This high requirement of wireless technology services will lead to cost optimization issues for the wireless/broadband operators as well as the tower companies.