New Delhi: The government has granted infrastructure status to the telecom tower provider industry, a move that is likely to ensure multiple benefits to the sector as well as boost investments.
Announcing the decision, telecom ministerKapil Sibal said the infrastructure status will make tower providers eligible for viability gap funding, higher limit on external commercial borrowing, lower import duties and exemptions on excise duty on telecom infrastructure equipment.
Companies like Bharti Infratel, Indus Towers and Reliance Infratel will get accelerated depreciation, which will encourage more investments in the sector, he said. Tower providers will also get softer lending rates at 3-4% on loan terms of 10-15 years compared to the market borrowing rates of 12-13% over 5-7 years. Companies will be given a tax holiday under section 80-IA of the Income Tax Act, the minister said, adding that the industry body will have to talk to the Reserve Bank of India to ensure the benefits.
"We have kept the door wide open and now it is for you to negotiate and explain your position to the institutions concerned that you have put in place a system that will give great encouragement to the industry," Sibal said. The Cabinet Committee on Infrastructure has included telecom towers along with fixed line in the harmonised list of sub sectors. An implementation committee comprising representatives of RBI, Securities and Exchange Board of India, Insurance Regulatory and Development Authority and the Planning Commission has been formed.
Industry body Tower and Infrastructure Provider's Association (Taipa) will work with the implementation committee to bring in commonality of interest to ensure rapid progression, chairman Akhil Gupta said.
He said the move to include tower companies in the unified licensing regime, under which they would have to pay part of their revenues as licence fee, was welcome. He, however, said tower companies should left out of the licensing regime completely.
"By December, the unified licence regime will be in place and all issues will be resolved," Sibal said, indicating that issues including that of double taxation emerging from bringing tower companies under the licensing regime, would be sorted out.
The telecom department has also issued draft guidelines for the states to follow a harmonised approach to levy penalties on mobile phone companies. "Madhya Pradesh came out with a comprehensive policy, which can become a benchmark for other states. We have asked DoT to convene a meeting with all state secretaries," Gupta said, adding that a standardised policy could be put in place for all states within two months.
He said the tower industry was looking at eliminating the usage of diesel to power telecom towers. It has begun the process by conducting a pilot programme at 1,000 sites that will bring back results of using alternate energy resources like solar power and natural gas by March next year. Taipa also issued two letters of intent to Mahindra & Mahindra and Creative Mark Engineering Solutions, which will work as renewable energy service companies to set up renewable energy-based power plants near the telecom towers sites and sell them power on a pay-per-use model.
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