Telcos may need to shell out more for site installations

It looks like the New Year has not started on a good note for Indian telcos. After being rapped up by the TRAI for not giving compensation to subscribers for call drops, telcos may now have to pay additional amount for site installations.

"Tower installation costs have increased manifold, primarily due to exorbitant permission fees being charged by municipal corporations and local authorities across the country," a Tower & Infrastructure Providers Association (TAIPA) spokesman told ET.

The association has warned telcos of tough days coming up, because of outstanding rental agreements of a majority of India's 4.5 lakh towers. Site owners and resident welfare associations (RWAs) are demanding manifold increases in rent/lease charges, leading to a big hole in the telcos’ pockets.

In the recent past, costs to install towers have sharply risen in the metros, class A & B cities and state capitals. This has happened because of municipal corporations’ increased overall permission costs for putting up new sites, renewing old sites or even bringing in new tenancies to already existing towers.

"The margins impact will vary from towerco to towerco and will depend on the extent the additional costs can be passed on to mobile operators as per their master service agreements (MSAs), especially since monthly site rentals have gone up by at least an average 10% in the last six months, and the number is much more in Mumbai and Delhi," a top executive of a leading global tower firm told ET.

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