American Tower Execs: India Growth Will Continue Despite Consolidation, Churn

Posted by SP Global

American Tower Corp. executives said Feb. 25 that the company’s growth in India will continue despite mobile carrier consolidation and a general “reordering” of the mobile industry in the country.

The communications real estate investment trust expects organic tenant billing growth to be “essentially zero” in India in 2020 after a roughly 20% decline in 2019, assuming a 12% customer churn rate from carrier consolidation, CFO Thomas Bartlett said on an earnings call, adding that the impacts from consolidation are “largely over.”

The company, meanwhile, continues to adapt to the uncertainty surrounding India’s Supreme Court ruling in 2019 on the definition of adjusted gross revenue, and the pressure the ruling put on wireless carriers via new liabilities. Prominent carriers such as Bharti Airtel, Vodafone Idea and Tata Teleservices together owe roughly $13.9 billion in license fees, penalties and interest payments after the court determined that non-telecommunications-related activities would be included in adjusted gross revenue.

“To predict how it will unfold, I can’t offer much in the way of content, but our adaptability, I can assure you, will be put into play how that evolves,” CEO James Taiclet said.

The company still expects 9% growth in gross new business in India in 2020, the highest rate among American Tower’s international markets, Bartlett said. The company’s build program in India is “very, very strong,” representing roughly 70% to 80% of the company’s build activity overall.

“Longer-term, we continue to expect India mobile network operators to deploy significant levels of capital into their networks as 4G penetration grows and mobile data usage continues to expand,” Bartlett said. “And again, to the extent … a more favorable resolution of the [adjusted gross revenue] issue is reached, it is possible that we may outperform our current expectations.”

Taiclet described the long-term demand picture in India in similarly positive terms. The impact of the Supreme Court’s 2019 ruling should be “fairly short-lived,” and current network infrastructure is “woefully inadequate” to serve a population of 1.3 billion.

“At the end of the day, no matter what carriers are serving that population, they’re going to have to have a significant amount of equipment added to sites in that country and a significant amount of sites added over time,” Taiclet said. “And we’ll be there for that.”―CT Bureau