Telecom tower companies are expected to see a 5-6% growth in tenancies over the next two fiscal years driven by a revival in network expansion by telecom operators, said a Crisil report on Wednesday, after an analysis of three tower companies which account for 90% of the towers in the country.Further, this revival in capital expenditure by some telecom operators will translate to incremental tenancies at existing sites, driving improved tenancy ratio after years of moderation, the ratings agency said.Tower companies are expected to undertake annual capex spends of Rs 10,000 crore over FY2027 and 2028 for adding new towers, upgrading existing sites, and deploying energy efficient solutions, such as solar systems and lithium-ion batteries, as per the report. This will likely be funded by internal accruals, limiting reliance on debt.A higher tenancy ratio improves the average revenue per tower (ARPT), a key performance indicator for the passive infrastructure sector, along with operating leverage and returns.“Tower cos saw tenancy growth of ~6% growth in fiscals 2024 and 2025, which was supported by the rollout of 5G technology, densification of networks, and expansion in rural coverage by leading telcos. Tenancies were added largely on single-tenant towers following consolidation in the telecom industry, leading to decline in tenancy ratio to 1.42 times in fiscal 2025 from 1.47 times in fiscal 2023,” Crisil said, adding that tenancy growth moderated in fiscal 2024 to 4% as network expansion moderated.Anand Kulkarni, Crisil Ratings director, said tenancies on existing sites will lift the tenancy ratio to 1.46-1.48 times by March 2028. The improving ratio will strengthen operating leverage by enabling better absorption of fixed costs, with the EBITDA margin of the players projected to increase to around 50% in FY2028 from around 48% over the two fiscals through 2026.