A new study from ABI Research shows that the high cost of erecting and running cellular communications towers has driven many operators toward leasing arrangements in recent years. Currently, about 17 percent of all towers are leased, but ABI expects the number to rise to about 25 percent in 2015.
This trend is most pronounced in the United States and in India – where it is driven by low ARPUs and high levels of competition – but according to practice director Aditya Kaul, “Although they are still embryonic markets, Latin America and Africa offer the greatest potential for growth in cellular tower leasing."
Leasing markets are being driven forward by competitive pressure to cut operating costs and to keep up with the pace of innovation in services. The model of offloading tower ownership (earning revenue from that), and letting third parties do the management has proven very successful in both India and the U.S.
The Indian tower company Bharti Infratel is eyeing African markets, while American Tower is acquiring assets in South America and in India itself. Other major players include Indus Towers (the world’s largest tower company with about 44,000 sites), and Crown Castle in the U.S.
While tower leasing is not unknown in the Asia-Pacific region, it is impeded in two of the largest potential markets – China and Japan – by regulatory issues.
In Europe, the pattern is somewhat different: There are few tower operators there, and typically operators hesitate to share towers if that risks losing their competitive advantage in terms of coverage. A more popular model for operators is RAN sharing, particularly in Scandinavia. "RAN sharing is quite the fashion in Europe," said Kaul, “because the cost of a new site is one of the highest in the world. According to ABI Research estimates, a shared network in Europe can deliver more than $400,000 in CAPEX savings per site."