Telecom capex to fall from next year

The capital expenditure by telecom service providers is slated to peak in 2007-08, in which operators are expected to invest around Rs 64,530 crore.

This will begin to taper off from 2008-09 due to an increase in sharing of passive infrastructure and hiving off tower businesses.

According to a report by global research and analysis major Morgan Stanley, the all India investments stood at Rs 36,685 crore in 2005-06 and is estimated at Rs 47,561 crore in 2006-07. This would further rise to around Rs 64,530 crore in 2007-08, before tapering off to Rs 61,660 crore in 2008-09.

The leading telephony major Bharti Airtel is expected to invest around Rs 13,768 crore in 2007-08, while the second largest operator Vodafone Essar would invest around Rs 9,001 crore during the same period.

CDMA major Reliance Communications is expected to pump in Rs 16,282 crore and Idea Cellular Rs 3,976 crore, while the remaining is expected to come from state-owned players such as Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), with Tata group companies contributing the rest.

Post 2008-09, the investments will decline by 30-40 per cent, due to an increase in sharing of passive infrastructure and hiving off tower divisions into separate entities. But this would lead to higher returns on capital employed (ROCE) as capex go into tower companies.

The total capex is expected to decline to Rs 61,660 crore by 2008-09 and Rs 41,184 crore in 2009-10.

With over 1,20,000 lakh towers in the country, and another 2 lakh expected to be added in next two-year period, companies are increasingly looking at the sharing of infrastructure.

Most of the companies - including Reliance Communications, Bharti Airtel, Tata Tele and Idea Cellular "� have also announced hiving off their tower businesses into separate companies.