The higher ratio will improve average revenue per tower, operating leverage and returns and lead to healthy cash accrual | Photo Credit: PRASHANT NAKWE

Tenancy revenue for telecom tower companies is expected to grow 5-6 per cent in FY27 and FY28 driven by continued capital expenditure by telecom companies for expansion efforts, as per Crisil Ratings.

Revival in capex by select telcos, particularly in overlapping circles, will translate to incremental tenancies at existing tower sites said the ratings company. The growth will improve the tenancy ratio after years of moderation.

“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. Notably, more tenancies on existing sites because of network expansion in overlapping circles will lift the tenancy ratio to 1.46–1.48 times by March 2028,” said Anand Kulkarni, Director, Crisil Ratings.

The higher ratio will improve average revenue per tower (ARPT), operating leverage and returns and lead to healthy cash accrual, keeping credit profiles stable, as per an analysis of three tower companies, accounting for around 90 per cent of towers. In FY24 and FY25, tower companies saw tenancy growth of around 6 per cent, supported by the rollout of 5G technology, densification of networks and expansion in rural coverage. Tenancies were added largely on single-tenant towers following consolidation in the telecom industry, leading to decline in the tenancy ratio to 1.42 times in fiscal 2025 from 1.47 times in fiscal 2023.

annual capex

“Tower companies are estimated to undertake annual capex of around ₹10,000 crore over fiscals 2027 and 2028 for adding new towers, upgrading existing sites and deploying energy efficient solutions, such as solar systems and lithium-ion batteries. Strong internal accruals will likely fund majority of the capex, limiting reliance on debt. Leverage will improve, with the net debt (including lease liabilities) to EBITDAR ratio expected to decline to 1.8–1.9 times in fiscal 2028 from around 2 times in fiscal 2026, keeping credit profiles stable,” said Nitin Bansal, Associate Director, Crisil Ratings.

The EBITDA margin of players is expected to increase to around 50 per cent in fiscal 2028 from 48 per cent over the two fiscals through 2026. Return on capital employed is estimated to improve to 17 per cent by fiscal 2028 from 14 per cent in the previous two fiscals, reflecting efficient asset utilisation.

Published on June 17, 2026