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Tower stake sales may pare up to Rs 90,000 crore telecom debt: Icra

The telecom industry could pare as much as Rs 90,000 crore debt if stake sale deals of mobile tower assets, currently being discussed, materialise, credit rating firm Icra said today.

It predicted structural and material changes for the telecom tower industry in the medium term.

Icra also anticipated some headwinds in the short term, as consolidation of telecom operators leads to rationalisation of tenancies, but remained confident about the growth prospects in coming years.

This growth would be fuelled by the network expansion of telecom operators, keen to meet the data needs of consumers, it said.

"As per Icra estimates, debt to the tune of Rs 80,000- 90,000 crores can be pruned from the telecom industry if the stake sale transactions of tower assets currently under discussions materialise," it said.

With around 4 lakh towers and 8 lakh tenancies, the telecom tower space is a sizeable one in the world, it added.

It said the sector has 10 organised players (besides small tower owners) wherein nearly three-fourths of the portfolio (74 per cent) is controlled either by tower companies promoted by telecom operators, or by telecom operators themselves.

"Over the next 1-2 years, there is likely to be a material change in the industry structure with number of players expected to reduce to 4-5," Icra predicted.

Summing up the upcoming trends, it said that one of the key developments would be the expected change in ownership from telecom operators to independent players, given ongoing consolidation moves and the interest from institutional investors and independent tower companies.

In addition, the industry is also headed for robust growth in the coming years fuelled by the network expansions of telecom operators, it added.

Also in the offing is upside in rentals due to improved negotiation power that would follow consolidation as well as from greater independent ownership, Icra said.

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