It is reported that rising cost of steel is now beginning to pinch telecom tower companies as well. According to industry estimates, the average cost of a single tower has increased by INR 11,000 to around INR 61,000 now as compared with INR 50,000 in October 2007 due to rising input costs.

This is forcing tower companies to increase their rental prices, which in turn is driving up the operational cost of telecom service providers. Structural steel angles and plates contribute to around 60% of the cellular tower cost.

According to industry experts, average basic cost of angles has increased from INR 28,000 per tonne in October 2007 to INR 43,000 in March 2008. Similar price trend is seen on the plates also. Prices of galvanized hardware have also increased from INR 55,000 per tonne to INR 75,000 per tonne. The impact of this is around INR 1,000 per tower.

Mobile subscriber base is expected to touch 500 million by 2010 for which at least 300,000 more towers are required. Rising steel price may increase the capital expenditure required by INR 330 crore on towers alone. There are a number of companies offering tower infrastructure in India.

While GTL, American Tower Company and Quippo are the major stand alone tower firms, mobile operators including Bharti Airtel, Idea Cellular, TATA Teleservices and Reliance Communications have formed their own tower infrastructure companies in a bid to unlock its value.