Bharti Infratel Ltd today said it expects to see strong tower additions due to higher demand for next-generation technology. This was after the company saw net tower addition of 1,482 in Jul-Sep, the highest quarterly addition in many years, while net co-location additions were the highest in quarterly terms in the last three years.
The company reported a 1.5% on-quarter rise in total number of towers at 97,283 for the quarter ended September, while it net added 2,116 co-locations sequentially in Jul-Sep, taking the count to 176,332. "We believe that a strong digital story is unfolding. And potentially there will be acceleration in demand in terms of next-gen (next-generation) 5G technology in the next couple of years," Chairman Akhil Gupta said in a post-earnings conference call. This, he said, should provide opportunities for passive infrastructure companies such as Bharti Infratel to evolve into shared digital infrastructure providers, with more sharing revenues added to the portfolio.
He said the move warrants further investments across stakeholders, and the strong increase in new towers this quarter would definitely indicate "green shoots" towards that. The tower company is also awaiting the Department of Telecommunications' approval to add more passive infrastructure, which is expected to be completed soon.
This is likely to aid in the growth of the combined entity once the merger of Bharti Infratel with Indus Towers Ltd is complete, the company said. The company said the merged entity would be the largest tower company globally with a tower base of over 159,000, and a co-location base of over 311,000, as per the full-year audited results as of March-end. The company also reported negative energy margins for the reporting quarter, but Bharti Infratel's management said the company is confident of returning to energy margins in the range of 0-3% going forward, as it moves to the fixed energy model from the follow-through model.
Asked about certain disputes that have impacted the company's energy cost, Gupta said the dispute was mainly related to "wrong-billing" by energy providers. The company also said the conclusion of the adjusted gross revenue case, which gave telecom operators 10 years to pay back their dues arising from the case, bodes well for the passive infrastructure industry, including Bharti Infratel. Today, shares of Bharti Infratel ended 1.9% lower at 192.15 rupees on the National Stock Exchange.