Telecom tower companies including Bharti Infratel and Indus Towers will soon have to pay eight per cent of their annual revenues as licence fees to the Government. That is because the Department of Telecom has decided to bring telecom tower companies under the purview of the new unified licence regime.
Till now tower companies were given an ‘Infrastructure Provider’ status and hence they were not required to pay any revenue share to the Government.
In 2010, TRAI submitted a proposal to bring tower companies under licensing on grounds that it would enable them to reduce restrictions from different local bodies while being rolled out. TRAI had said that the Government would get additional revenues of around Rs 2,000 crore.
However, tower companies, including Viom Networks and American Tower Corporation, have been opposing this move as, according to them, this was against the Government’s stated objective of expanding telecom infrastructure in the country.
Industry representatives said that forceful migration to the unified regime will increase the burden on tower companies already reeling under the overall slowdown in the telecom sector. The tower industry started feeling the heat in 2010-11 after the Supreme Court cancelled 122 licences embroiled in the 2G spectrum scam. Towers and Infrastructure Providers’ Association (TAIPA) said that the tower industry was struggling to recover its cost of capital after having invested over Rs 1 lakh crore.
“The proposed imposition of licence fee will strongly hit the bottomline and would drive some companies out of business,” it said. The other concern was that while the unified licence allowed 74 per cent foreign direct investment, there are tower companies such as the American Tower Corporation, which are fully owned by foreign entities.
The DoT had earlier put on hold its decision to bring infrastructure providers under the unified licence regime because it wanted to seek an exemption from the Department of Industrial Policy and Promotion as far as FDI cap is concerned. But this issue was resolved after the Government announced 100 per cent FDI for the telecom sector.
Therefore, DoT has now decided to push through with the move to bring tower firms under the purview of the new licensing regime.
According to an internal DoT note, drafted for the consideration of the Telecom Commission, the telecom regulator will be asked to spell out the modalities.