How Indus Towers is enabling a digital workforce and a Digital India

Renowned joint-venture towerco Indus Towers, a partnership between Bharti Airtel, Vodafone and Idea, continues to set the standard for operational excellence and innovation in the tower industry. We spoke with recently appointed CEO, and TowerXchange advisory board member, Bimal Dayal to learn about the company’s approach to workforce digitalisation, continuing green tower initiatives, and the role of towercos in the race to 4G and Smart Cities in India.

TowerXchange: Congratulations on your new role; what is your vision for the future of Indus Towers?

Let me start by saying where we are at Indus Towers and how I view our current situation, then we can talk about where we are heading.

I’ve been asked many times since my appointment as CEO what changes I have planned. I have been part and parcel of setting the course of this company along with BS Shantharaju. We have set ourselves on a great course already, and the plan remains the same. We’re calibrating the course naturally, but the direction we’re heading is fine. If anything, I’d like to speed up our progress; we’re on course but we’d like to get there faster. I would like to guide the organisation and foster innovation in each department of the company and with every step we take. We continue to drive business growth, strengthen our commitment to green towers, foster a culture of safety among our employees and the entire ecosystem, and we’re achieving robust financial growth.

We have introduced a lot of innovative new ideas, sometimes as a matter of survival, sometimes simply because there was no-one else prepared to do it. For example, our fixed-cost energy model has become a de facto standard within the Indian tower industry, and we have achieved a large scale conversion from indoor to outdoor equipment on our towers.

One of our lesser known achievements was the digital enhancement of our workforce. We have provided smartphones for all employees, including our field technicians, and can now receive real-time updates on their location, confirmation of completion of preventive maintenance tasks, and further reinforce health and safety best practices. We have a large workforce, including our partners, and we have enabled the staff responsible for site acquisition, deployment and O&M who are continually on the move and in touch with landlords; we ensure that their safety is paramount.

For a company involved in a business which many might not think of as ‘glamourous’, we have managed to do a lot of important soft work with our workforce and partners. This was the third year that Indus Towers has been awarded the Great Workplace award by Gallup, and we rank number 41 on the list of Great Places to Work in India; this is an improvement from a position in the mid-sixties in the last ranking, which is a significant achievement for a company that’s only 8 years old. Handling equipment is a people business, and people are our most important asset.

One aspect I’m personally very passionate about is the role of towercos in Smart Cities. When the first cities came to the table, Indus Towers played a prominent role, and what we envisaged will soon come to pass. Towercos are getting more clarity around Smart Cities, we’ve had some initial successes, and the latest tenders confirm that we’re on the right track - there is a lot in the pipeline regarding smart cities.

TowerXchange: What are some of the main changes in the Indian tower market in the year since we last spoke?

We have been observing a theme of consolidation, with ATC and Viom coming together and creating a good new monolith.

We are seeing increasing regulatory engagement; considering the tower industry can do more to bring down the cost of telecoms development. We hope the regulatory environment will continue to become more conducive to investment.

Digital India and its proposed Smart Cities represent a large opportunity for towercos. Rural connectivity is becoming more meaningful for IP-Is (IP-Is are companies licensed in India as infrastructure providers), provided the regulators clear the decks for us to participate. IP-Is and their partners have taken a collaborative approach toward problem solving, and have supported the rollout of successive generations of technology on existing infrastructure, while also building more. There is no parallel situation where so much reorganisation of networks and spectrum has happened, as has taken place in India.

The capability of IP-Is gives confidence to a lot of our operators to acquire spectrum: we’re taking a collaborative approach to reduce time to market and accelerate return on investment in spectrum, and we’re integrating the new product innovations our customers demand. We’re even starting to improve the skyline, with the emergence of lighter towers in India, supporting both the macro and small cell network layers.

TowerXchange: Congratulations on passing the 50,000 green site landmark! How are India’s towercos progressing towards the government’s target to lower carbon footprints?

At the end of March 2016, Indus had converted 50,641 sites to run diesel free. Crossing the 50,000 green site landmark is a big deal because as our tenancy profile grows, conversion to green towers becomes more difficult as power consumption goes up; green sites require larger energy storage capacity, for example.

I see this as Indus Towers’ agenda, more than the government’s, although we will comply with or even surpass any requirements. Going diesel-free will be a certainty at some point but the timeline remains unknown. Whether it takes three, five or more years, we aim to stop handling diesel completely.

We will look at converting more sites to renewables as an alternate substitution agent, but the business case remains marginal for many sites at present.

TowerXchange: What has been your specific progress in converting multi-tenant sites to green sites?

We have converted many single and dual tenant sites, and are even starting to convert three-tenant sites. We evaluate the case for upgrading each site on its own merits, focussing on three dimensions. First the uptime cannot be compromised by the conversion; second, the energy solution needs to be sustainable; and third, it must lower the operating cost of the site.

I’m confident that we will be able to not only maintain the pace of our green programme, but also add renewables into the mix.

TowerXchange: To what extent has Indus Towers partnered with RESCOs, and what needs to change for RESCOs to play a larger role in Indian telecoms?

Our engagements with RESCOs have been limited and have not increased, which is somewhat disappointing. The energy control regime is opening up - net metering and open access are critical - which will open avenues to partner with RESCOs or makes it possible for Indus to become a provider ourselves.

So far the RESCO proposition hasn’t worked well, but with the changing regulatory environment I see scope for deeper partnerships between IP-Is and RESCOs to take big steps in the next two years.

TowerXchange: It has been suggested that India will need to double the number of cellular PoS for the 4G era. How is the development of 4G progressing in India, and what are the opportunities for towercos?

4G is progressing faster than what may be visible or discussed in India. The device base grew nine times from 5mn to 45mn in 2015. The entry level price for 4G handsets has dropped by almost 50%.  The new 4G operator will be a major catalyst and driver; all the major operators are accelerating their 4G rollouts in deeper territories than initially planned. There is a huge amount of capacity building underway to make sure that when the battle for the 4G customer occurs between operators, then there is enough capacity to provide good end user experience. Well-connected backhaul is critical for good 4G service.

Indus Towers does a lot of what we call ‘projects’: ranging from as little as one antenna being added or removed, to fibre being brought into a site. In 2014, a busy year, we did 133,000 projects. In 2015 we did 216,000 projects including everything from 2G, 3G and 4G to microgrids. Growth is increasing year on year and, with another spectrum auction coming up, more network realignment will be required.

The 4G acceleration is having a big impact; to sustain each 4G node a great deal of activity is required at the backend, which IP-Is are providing. The rollout of 4G has been at a breakneck speed – it may be an unprecedented scale and speed of rollout – and it has necessitated effective co-operation between the MNOs and IP-Is.

TowerXchange: The Economic Times recently suggested Indus Towers may be a prospective buyer in the current round of Indian tower industry consolidation – what criteria would you use to evaluate prospective acquisitions, and how do you see the structure of the Indian tower market being redefined by M&A?

In the Indian tower market, much of the large scale consolidation has taken place with the acquisition of Viom Networks by American Tower. There are a few smaller players left in the market, with 10,000 towers or less, which will increasingly become targets for consolidation.

With any investment one must examine the potential payback, the health of the sites, and their future potential. M&A is a game of synergies given the scale of our footprint. Any potential acquisitions must have a good fit with our rollout strategy; there must be a need from our clients for those locations. The consolidation of IP-Is will mimic MNO consolidation; there will always be a handful of small, independent niche players, but eventually the Indian market will be consolidated into maybe four larger towercos.

TowerXchange: How does the cascading effect of multiple layers of taxation – including the recent decision to keep diesel outside the GST framework – affect the economics of tower industry investment in India’s ICT infrastructure?

GST is a principle to relieve multiple taxes levied at each stage of consumption; from import to consumption. GST is a carefully planned, great initiative with positive intentions; a great reform. For the next step we need to look at the fine print when central GST is passed.

The taxes paid on diesel by industrial consumers such as the railway, aviation and telecoms is very high. Petrol and diesel are excluded from the GST, which will dampen the positive impact of this taxation reform. Electrical equipment and the partner ecosystem will see their tax burden reduced under GST; the movement of goods will improve.

I feel we are seeing some initial bumps in the road from GST which will make the cost of operations go up in the near term, but personally I have faith that within two years IP-Is’ overall tax burden will go down.

TowerXchange: Indus Towers has been very innovative in its approach to developing Smart Cities; what are the new developments in this area?

We have been articulating it very clearly: we have the capability to provide the passive infrastructure for any Digital Backbone in the planned smart cities, and support all service branches on the digital highway.

Indus Towers is present in 17 of the 22 proposed smart cities and we are engaging to define what can be done jointly, and what role Indus can play Smart Cities are not only about doing it yourself, but about striking partnerships to provide services such as waste management, parking management and surveillance. Led by IP-Is, many consortia will be formed to setup and service Smart Cities; and it’s not just about setup, but running and sustaining Smart Cities over a long period. We are keeping our fingers crossed; the progress has been satisfying so far and we can take a big step forwards in the Digital India agenda in the next 12-24 months.

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Don’t miss the upcoming TowerXchange Meetup Asia being held on 13-14 December at the Marina Bay Sands,Singapore. For more information visit https://meetup.towerxchange.com/event/779b884f-2156-4a99-81e0-747a2f905382

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