NEW DELHI: The Department of Economic Affairs (DEA) will shortly come up with “a general formula” to incentivise telecom tower firms, leveraging their infrastructure status, according to telecom secretary MF Farooqui. The Department of Telecommunications had recently urged the DEA to clear a slew of pending incentives, which would help telecom tower companies such as Bharti Infratel, Viom Networks, Indus Towers, GTL and Reliance Infratel.
In the run-up to the Budget due next month, Farooqui had urged the DEA to approve accelerated depreciation benefits and also pave the way for concessional loans with longer tenures of 12-15 years to help cash-strapped tower companies meet capitalexpenditure requirements. “DEA secretary Arvind Mayaram has given a favourable response to the demands raised by the DoT, and we will shortly take this forward through further meetings,” Farooqui told ET.
Though the DEA considers telecom as an infrastructure sub-sector, Farooqui believes that without complimentary incentives demanded by DoT, it would be a challenge for tower companies to realise the impact of such inclusion. The debt-laden telecom sector has been demanding a mix of fiscal incentives such as 10-year tax holidays for existing towers and new towers, accelerated depreciation at 65% on batteries instead of 15% now and inclusion of tower firms on the central bank-approved list of sectors eligible for priority-sector lending by commercial banks.
Viom Networks chief executive Syed Safawi is hopeful that the new government will consider inclusion of tower infrastructure services within the definition of infrastructure facility in Section 80 IA of the I-T Act. “The new government should allow higher limit of funds through external commercial borrowings (ECB) in order to retire high-cost domestic loans, which would reduce capital costs by credit enhancement, and make the sector more viable and attractive for private investments through supplementary grant funding,” Safawi said.
Bharti Infratel chairman Akhil Gupta is more blunt, accusing the government of not announcing till date a single concession even after the tower industry was given infrastructure status. “What’s the use of giving (infrastructure) status without any action on the concessions front,” Gupta asked. But he expects the new Narendra Modi government to lead from the front in addressing key challenges plaguing the tower sector.
One of the biggest challenges, he feels, is energy. “We consume diesel as we are forced to do so. We had set up the industry on the hope that if we establish towers, the government would take care of power. But this is not the case. There is a diesel mafia in many states and my people have often faced life threats,” says Gupta. To resolve matters, he believes, state electricity boards “ought to be told that telecom towers are vital and must be connected” to state grids. Gupta also believes the tower sector is being unfairly forced to embrace renewable energy by DoT.
The tower industry is also likely to urge the new telecom minister to clear the air on tower radiation rules, and especially mandate all states to adhere to the tower emission rules framed by the DoT. The Tower & Infrastructure Providers Association, the industry lobby body representing tower operators in India, is hopeful the new government will raise the ECB limit to help tower companies meet their high capex needs.
(Source: The Economic Times, June 17, 2014)