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Bharti Infratel sees slowdown in new towers, but will roll out small cells to expand existing bandwidth

In its earnings call for the fourth quarter, Bharti Infratel said that while its tower construction stopped after the lockdown, it will expand capacity more in existing telecom towers. This is interesting as the company said in its earnings call that it plans on using small cells, a technology usually associated with 5G networks. “The need for connecting from both office and home will become paramount now. People who could live with normal 4G are going to need more capacity and speeds even at home,” Bharti Infratel chairman Akhil Gupta said. “We were expecting that to take a big leap with 5G, but 4G has proven to be the country’s lifeline, so this phenomenon will now take place with 4G in an enhanced scale.”

Infratel and COVID-19

  • Infratel hopes govt will approve tower construction: Even so, the company said that it hopes to get permission to build out more towers in the coming days. Referring to a government decision this week to allow some construction, including fibre laying, to happen in rural areas amid the COVID-19 lockdown, Gupta said he hoped the same permissions would be granted for tower companies.
  • The company will try to get better deals on rent if market conditions allow: For now, Gupta said, the company will not try to renegotiate rent contracts with landlords. “At these times when our dependence on towers is increasing, we’d not like to take in anything that creates discomfort with landlords,” he said. “So going forward, we will see what market trends are on rentals,” and see if terms can change there, he said.
  • They are confident that Vodafone–Idea will survive: Citing reports that the government is inclined to let Vodafone–Idea pay its AGR dues to the government over twenty years, Gupta said, “I am confident they will survive and be a fine company and bounce back. When we look at discussions now, we do take into account that they’ll be there and be a great company and customer.”
  • Will build towers even if only one telco asks for it: When a tower is built with only one telco, that is less profitable to tower companies. However, Infratel said that if a telco asks for a tower in a place, they will build it regardless of if any other telco signs up too. “We are committed to building towers when they ask for it. We never say they have to be two tenants on day one.” He added, “This business is not on a tower by tower basis. Every tower you build has a 20-25 years basis. I can’t shut towers because there’s no tenant in 2 months.”

“The Company believes that thus far, there is no significant impact of COVID-19 pandemic on the financial position and performance of the Company,” the company said in its quarterly report. Bharti Infratel and Indus Towers, whose merger is imminent, represent the majority of the telecom tower business in India, serving Vodafone–Idea, Airtel, Jio, BSNL and MTNL.

  • Consolidated Revenues at Rs. 3,624 Crore, up 0.7% Y-o-Y
  • Consolidated EBITDA at Rs. 1,721 Crore, up 12% Y-o-Y
  • Operating Free Cash Flows at Rs. 847 Crore, down 27% Y-o-Y
  • Consolidated Profit after tax at Rs. 650 Crore, up 7% Y-o-Y

Quarterly Report | Press Release

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