I think all the negatives are priced in. Can understand if someone wants to make an exit cause the industry is totally stressed and I don’t see an industry wide revival anytime soon at least as long as RIL is there. Any positions are risky. Jio is also looking at using more and more captive towers so I doubt the future looks great…Valuations are cheap as heck and that’s the only reason I am invested with a very low allocation (less than 2%)
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With regards to recent 5g auctions,
Jio has gone for standalone 5 g network and 700MHZ spectrum which has range till 10 km, reducing tower needs.
Bharti and Voda has opted for non 700 MHz bands and NSA 5g which will require greater tower density to compete with Jio network.
IMHO, this should be positive for Indus.
Moreover, to compensate for higher upfront 5g cost, tariff hikes may be needed which shall again be positive for Voda and Bharti.
Another question I am wondering is whether this a writeoff or prudent provisioning for doubtful receivables. If just a prudent provision, there maybe a reversal later.
Regards
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BSNL planning sale of 10,000 towers (not behind a paywall)
Under the NMP strategy, BSNL and its sister company Mahanagar Telephone Nigam Limited (MTNL) are targeting the sale of a combined total of 14,917 towers in a phased manner by 2025.
ATC bought out Tata Teleservices’ nearly 13% residual stake in ATC Telecom Infrastructure in September 2019 for ₹2,500 crore in an all-cash deal. This valued the company at ₹19,000 crore. ATC had a tower portfolio of 80,000 towers at the time, pegging the valuation per tower at around ₹24 lakh. ( [bsnl: BSNL to sell 10,000 towers as part of monetisation plans, Telecom News, ET Telecom]( ATC tower valuation - ET )
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If you just value based on this then Mcap comes around
Rs 41302 Vs 51000 Cr today. ( this is without considering the VI defaulting & going out of businesses overtime)
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If you account for ~6% inflation, the valuation is about 53302 Cr for 24L per tower in 2019
Looking at the future prospects of BSNL/MTNL and the government not keen on giving them 5G licenses, I see only Jio and Bharti airtel (if at all Vodafone pulls out of the market) taking bulk of the share. In such case, how Indus will be able to monetize by purchasing these towers which are predominantly used by BSNL/MTNL when they continue to lose market share and become irrelevant in the market?
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BSNL, which provides telecom services in every part of the country except Mumbai and Delhi, owns 68,000 telecom towers. It is selling only those towers that have co-location arrangements with third party telecom service providers such as Reliance Jio and Airtel, people cited above said.
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I think valuation comparison also needs to take into account
- Locations of towers
- Number of co locations
- Whether it was a buyer’s or seller’s desperation for deal
Regards
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What would be the impact to Indus Towers?
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Further dilution on rentals probably, IF BSNL allows colocation of other operator kit. Which is a low probability event as Jio/airtel do their own tower biz. It only gives Vi more leverage over Indus as it can plead with the GOI to colocate with BSNL if Indus asks for payments on time. GOI has already invested in Vi and might be receptive to the idea and besides might make some money out of it.
From the news, Vi owes money to Indus for rentals and are late in paying.
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Do you think there is a possibility of Vodafone idea being acquired or merged with bsnl? They owe money to the government and they are also the largest stakeholder in vodafone idea
Likely Adani will buy it out with additional debt.
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Looking at the development of stellite internet companies like stalink. Is there a possible disruption for tower business in long run… Tesla’s starlink completely eliminates the requirement of tower…
Though they say that they only target rural areas, soon after the success they will venture into crowded urban area too
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i beleive its not possibel to provide 5G speeds with startlink lol…study the bankwidth of optical fiber compared to what starlink can do… 5G towers will be street furniture with no line of sight for starlink satillite…starlink does not work in shadows…storms etc…can a life line service like phone be left to the vagaries of weather… ? anyway that is my reading… Indus has cashflow issue with idea…rest are all stories…
Invested
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Hi All…
Reading about the 700 MHz in different article. Almost all point out to 1 factor that. This 700 MHz will not require much dense towers… This would cover around 100 kms and penetrate wall, trees etc . Will this be a threat for Indus towers.
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10 km is what Google search says.
Indian govt is pushing handset makers for really high-speed 5g and not name sake 5g. This will need millimeter wave support. This is very high frequency (6GHz). Higher the frequency higher the attenuation will be, which will need more towers and more line of sight.
For better understand, take the case of home Wi-Fi routers which these days have 2.4Ghz and 5GHz support. 5ghz will provide guaranteed high speed but it’s range is limited when compared to 2.4ghz. When your phone moves away from the router the connection switches automatically from 5ghz to 2.4ghz.
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Thanks Sudhakar for the clarification 