← Business Metric: Industry Specific (Infrastructure, Transport & Utilities) (all topics)
Tenancy ratio economics
What it is
A telecom tower's economics are driven by tenancy - how many operators share the same structure. The tower's cost is largely fixed, so a second or third tenant adds revenue at very high incremental margin
Contracts are long-term master service agreements with contracted escalation
Impact on industries
- The purest operating-leverage business in Indian infrastructure - incremental tenancy converts almost entirely to profit on an existing asset
- Long-term master service agreements give contracted revenue visibility over many years, which supports the leverage the model requires
- 5G densification adds loading and new sites, since higher-frequency networks need far more towers per unit of coverage
- Consolidation cut the tenant pool to effectively three, lowering the tenancy ceiling, and receivable risk from a stressed operator is concentrated