According to reports, Indus Towers, the world’s largest telecom-tower company, said it would replace diesel generators with batteries on 20,000 of its 1,10,000 towers by next year with the objective of reducing its carbon footprint.
It added it had already stopped using diesel – an environment-unfriendly fuel – as the power back-up in 5,000 towers, saving 3.6 million litres of the fuel a year.
Indus – a joint venture between mobile service providers Vodafone India, Bharti Airtel and Idea Cellular – is pitching ‘Indus green city’ as an example of its environment stewardship.
“We, as a company, are dedicated to an ecofriendly India,” says BS Shantharaju, CEO of Indus Towers. But Indus’ initiative, as well as similar moves by other tower companies, is as much about business compulsion as it is about a good practice, if not more.
Dismissing the Rs 19,000-crore tower industry’s claim of a change of heart, Hemant Joshi, partner, Deloitte Haskins & Sells, says it’s an act of “selfpreservation”. He says tower companies are simply responding to diesel being stolen by people who man these towers. “There are some pretty horrific stories of pilferage and the cost of running these towers is not feasible given the rental rates,” says Joshi.
“Green is a collateral benefit.” According to AT Kearney, a consultancy, the Indian tower industry has about 3,50,000 towers and spends Rs 8,500 crore a year on diesel. Officials at Indus and Viom Networks say, on the condition of anonymity, that 15% of the diesel they pay for is stolen. That works out to Rs 1,275 crore.
Diesel is also an ongoing source of friction between tower companies and their clients, mobile service providers, as some agreements put the onus of fuel payments on the latter. But mobile service providers often decline to pay the stated amount, citing pilferage. “A dispute on that creates a cash drain,” says a senior official at a leading tower company, not wanting to be named.
A 32% increase in the price of diesel in the past two years and large-scale theft of the fuel are further blows to an industry that has slid from promise to pain in just three years. Tower companies like Indus, Viom Networks and GTL Infrastructure had expanded aggressively after 2008, when mobile licences were given to eight new players. But the new business never materialised in the volume envisaged.
First, the slowdown in 2008-09 crippled the world economy. And then, in 2010, a legal taint fell over the licences, because of which mobile companies held back their rollouts.
Now, profitability of tower companies is under pressure and costs hurt like never before. “Reducing the consumption of diesel and its pilferage is critical from the perspective of creating a profitable, efficient and environment-friendly telecom industry,” says Manoj Tirodkar, chairman of GTL Infrastructure.
In its presentation, however, Indus makes no mention of diesel pilferage. But company officials who did not want to be identified admit this is the main driver to shift from diesel generators to batteries as the power back up.
The motive and pitch aside, tower companies are actively exploring options to reduce dependence on diesel generators, but there are issues attached with each energy alternative.
According to AT Kearney, of the 70,000 towers that are not connected to the grid, 5,000 have solar-power units . But their initial capital is high: the consultancy estimates acapital cost of Rs 10 lakh per tower to go solar. “It’s an expensive proposition as a back-up for grid electricity,” says Sairam Prasad, chief technical officer of Bharti Infratel, which owns 33,000 towers.
“The cost can go as high as Rs 40 a unit for a remote-tower site powered by solar energy compared with Rs 6 per unit for grid electricity. This cost is unsustainable.”
Bharti Infratel is, instead, using more efficient generators and alternative cooling solutions to reduce its diesel consumption. Elsewhere, Indus is using a battery bank to replace diesel generators on its sites. Battery installation costs Rs 1.2-1.5 lakh per site and the return on investment is three years, says a company presentation.
So far, Indus has largely done this in areas like Mumbai, where there is a good supply of power on the energy grid.