Tower Companies and Infrastructure Sharing

How separate companies that own mobile towers, and sharing infrastructure between operators, lower the cost of telecom networks.

Mobile networks need thousands of towers to hold antennas. Building separate towers for every operator in every location would be wasteful. Infrastructure sharing reduces costs.

Tower companies

Instead of each operator owning its own towers, specialised tower companies build and own towers and rent space on them to several operators. Each operator on a tower is called a tenant. The more tenants per tower, known as the tenancy ratio, the more profitable the tower and the lower the cost for each operator.

In India, Indus Towers, one of the world’s largest tower companies, was created in 2007 as a joint venture of Bharti Airtel, Vodafone and Idea Cellular. It later merged with Bharti Infratel. Globally, companies like American Tower own large tower portfolios.

Passive sharing: sharing towers, power supply and shelters.
Active sharing: sharing antennas, radio equipment or even spectrum.
Fibre sharing.

Economic benefits

Lower costs: operators avoid duplicating infrastructure, lowering prices for consumers.
Faster rollout: networks can expand quickly using existing towers.
Less clutter and environmental impact.
Easier entry for new operators, which can rent space rather than build everything.

Risks

When operators exit or merge, tower companies lose tenants and revenue. In India, consolidation of operators reduced tenancy for tower companies. Tower companies’ fortunes are closely tied to the health of their operator customers.

One tower, three operators

A tower company builds a tower in a town. Three operators each rent space on it. The cost of the tower is shared three ways, so each operator pays far less than if it built its own. Customers of all three networks get coverage, and the town has one tower instead of three.

Thinking sharing reduces competition

Sharing passive infrastructure like towers lowers costs while operators still compete on prices and services. Active sharing raises more competition questions and is regulated more carefully.

Key takeaways

Tower companies own towers and rent space to several operators.
More tenants per tower lower costs for each operator.
Indus Towers, created in 2007, is one of the world's largest tower companies.
Sharing lowers costs and speeds rollout, but tower firms depend on operators' health.