American Tower Corp (ATC) expects the Indian tower industry to face challenges of falling tenancies in 2018 before clocking in “significant growth” in the next couple of years, propelled by data growth and 4G roll outs.

“2018 will be a difficult year for the industry since there is shrinkage of tenancies. But, 2019 onwards there will be revival and in 2020 we will see significant growth,” Amit Sharma, president of ATC Asia, told ET soon after his company completed its deal to acquire Vodafone India’s 10,200 towers for roughly Rs 3,850 crore.

ATC is also awaiting government clearances for its deal to buy Idea Cellular’s 9,800 towers for around Rs 4,000 crore.

Sharma said “This deal is important because Idea and Vodafone are very strong in certain circles like Maharashtra, Bihar and Madhya Pradesh where we already have a good presence and the combined portfolio then makes us already a strong contender in those circles”.

For the next six months, ATC will be spent in integrating portfolios and standardising processes of the newly acquired towers, he said.

Three top tower companies, market leader Indus Towers, Bharti Infratel and ATC, own approximately 85% of total telecom towers in the country.

The consolidation among telcos is expected to hit them for the next 18-24 months due to fall in their tenancy ratios, or the number of operators (tenants) that have put up their antennae and infrastructure on a tower.

However, Sharma sees the “shrinkage in tenancy ratios as a temporary blip”, a direct result of consolidation in the sector, which will go away when telecom companies press the pedal on their 4G plans.

“The whole story is about data which will drive need for both new sites and considerable expansion on existing sites,” he said. “The requirement for towers will go up to support growth of 4G.”

While some of the present tower sites in urban areas may be overloaded, in-fill sites will be used by the operators, Sharma said. An in-fill site is typically an area where you put in extra capacity to take the load of the network.

ATC, one of the world’s largest independent tower companies, has been silently augmenting its towers portfolio in India ever since it bought 51% stake in Viom Networks for Rs 7,635 crore in the largest inbound acquisition in FY16.

Buyout of Vodafone and Idea’s captive towers would boost ATC’s India towers portfolio to nearly 80,000, taking it closer to Indus Towers and Bharti Infratel with 123,00 and 91,000 towers, respectively.