India’s telecom tower industry is expected to enter a stronger growth phase over the next two financial years, supported by renewed network investments from telecom operators and rising demand for tower infrastructure, according to a report by Crisil Ratings.
The agency said fresh capital expenditure by telecom companies on 4G network expansion and 5G deployment is likely to accelerate tenancy growth across the sector.
“Renewed capex push by select telcos for expansion of the 4G network and 5G rollout is likely to accelerate tenancy growth to 5-6 per cent over this fiscal and next, even though spending by some large telcos remains calibrated,” Crisil said.
The report noted that increased sharing of existing tower infrastructure will improve utilisation levels and support profitability. As operators continue expanding networks in overlapping service areas, more tenants are expected to be added to existing sites, pushing the industry tenancy ratio to between 1.46 and 1.48 times by March 2028.
Higher tenancy levels are expected to improve operating leverage by allowing tower companies to spread fixed costs across a larger revenue base.
As a result, Crisil estimates that EBITDA margins for the sector will rise to around 50 percent by FY28, compared with about 48 percent during the two years through FY26.
The report also expects return on capital employed (ROCE) to improve to 17 percent by FY28 from roughly 14 percent in recent years, reflecting better utilisation of existing assets.
Crisil’s analysis covers three major tower companies that account for nearly 90 percent of India’s independent telecom tower industry. According to the report, the sector is beginning to reverse a period of declining tenancy ratios.
Tower companies recorded tenancy growth of 6 percent during FY24 and FY25, driven by 5G rollout, network densification, and rural expansion by leading telecom operators.
However, many of those additions occurred on single-tenant towers following industry consolidation, causing the overall tenancy ratio to fall to 1.42 times in FY25 from 1.47 times in FY23.
In FY26, tenancy growth slowed to 4 percent as network expansion by some large telecom operators moderated. Despite this, Crisil expects growth momentum to improve as operators resume investments.
The report also highlighted continued investment by tower companies to support network expansion and improve efficiency. According to Nitin Bansal, Associate Director at Crisil Ratings, tower operators are expected to invest around Rs 10,000 crore annually during FY27 and FY28.
The spending will be directed toward adding new towers, upgrading existing infrastructure, and deploying energy-efficient technologies such as solar power systems and lithium-ion batteries.
Crisil said most of this capital expenditure is likely to be funded through internal cash generation, reducing the need for additional borrowing.
As a result, leverage levels are expected to improve, with net debt, including lease liabilities, projected to decline to 1.8-1.9 times EBITDA by FY28, compared with around 2.0 times in FY26.
The agency noted that the pace of network expansion by telecom operators remains a key variable and will ultimately determine how quickly tenancy additions materialise.
Nevertheless, stronger infrastructure utilisation, improving profitability, and stable balance sheets are expected to support the sector’s growth trajectory over the next two years.
