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Indus explores ways to rein in towering energy costs

Indus Towers Ltd, India’s largest telecom tower installer, will sharpen its focus on lowering energy costs, as it prepares to upgrade existing tower sites for the 5G launch later this year, and add more light tower sites and small cells to expand coverage.

Indus, the largest installed passive telecom infrastructure firm in the world with over 185,000 towers, is looking at using Internet of Things (IoT) and fixed energy models to counter fluctuations in the energy prices, which have a direct impact on its operations. At present, it passes on the cost of higher fuel prices to its telecom service provider customers.

“This fluctuation has impacted and is making us lot more aware to optimize it for our customers,” Bimal Dayal, chief executive officer and managing director at Indus Towers, said in an interview.

The fixed energy model will comprise a predetermined cost for a year or two under contracts with telcos. In this case, Indus will invest the capex but take home any profits it makes by reducing the energy costs beyond what it commits to customers.

“We are in the process of working with our customers to see whether we could bring in IoT as well,” he said. IoT could help monitor energy consumption and the company can then devise ways to reduce costs.

About 80,000 or 43% of the total number of installed towers is using green energy. However, diesel gensets and batteries are used in some sites as a contingency measure.

In 2021-22, Indus Towers’ power and fuel expenses, with the largest share of its total expenses, rose by over 7% to ₹10,265 crore from ₹9,583 crore in FY21.

In FY22, it posted 8% revenue growth to ₹28,069 crore, while profits were up 28% to ₹6,373 crore from 4,975 crore in the year-ago.

Indus is also looking at ways to revive or reuse batteries used to power tower sites, which will also help reduce energy costs. Dayal said the company can look at the new initiatives after successfully closing the merger with Bharti Infratel. The process, which began in 2018, saw Vodafone group promoters picking up 21.05% in the merged entity. Bharti Airtel and its subsidiary Nettle Infrastructure Investments Ltd now holds 46.49% in the company after the two companies picked up an additional 0.05% stake in March 2022.

Indus is also looking to close renegotiations of its master service agreements (MSAs) with the telcos by this quarter.

“It’s a matter of discussion and negotiation. I’m hoping that maybe within this quarter itself, we should be able to close one way or the other,” Dayal said, adding that one of the agreements was closed in the March quarter.

MSAs are long-term contracts that set out the terms for getting access to the company’s towers. All service providers are offered the same terms and receive equal treatment for sharing the installed tower infrastructure.

Dayal said Indus Towers will maintain its capital expenditure at about ₹3,000 crore, and add around 6,000 towers this financial year, on a par with the levels of last year.

He said the telecom regulator’s discussion initiative on using street furniture as infrastructure for small cells and ariel fiber deployment was timely considering that the 5G rollout is expected later this year, and would complement the company’s operations since it is deploying small cells to improve connectivity. Livemint

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