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Updated: October 26, 2013 03:06 IST

Tower companies to come under licensing regime

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Soon mobile tower companies will come under the licensing regime.
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Soon mobile tower companies will come under the licensing regime.

The Department of Telecommunications (DoT) is readying a proposal to bring mobile tower companies under the licensing regime, following government’s decision to allow 100 per cent foreign direct investment in the telecom sector, official sources said.

Mobile tower companies, called IP-I in technical jargon, will have to pay 8 per cent licence fee on the revenue earned from telecom services if brought under the licensing regime.

At present, they can operate by paying Rs.5,000 to register with DoT.

The DoT’s proposal would be placed before the Telecom Commission, an inter-ministerial panel, the sources said, adding that if approved, tower firms would have to obtain telecom licence for carrying out their operations.

The Telecom Regulator Authority of India (TRAI) had recommended bringing telecom tower companies under the licensing regime. The suggestion had been opposed by industry players.

TRAI estimates that bringing IP-I under the licensing regime will fetch the government revenues of around Rs.1,900 crore a year.

The Tower and Infrastructure Providers Association (TAIPA), the industry body representing mobile tower companies such as Bharti Infratel, Reliance Infratel and Indus Tower, opposed the proposal on mainly two grounds — FDI limit and definition of revenue on which they would have to pay the licence fee.

“In order to include IP-I in the licensing regime, one of the hindrances was that the FDI limit was 74 per cent for telecom services, and IP-I was allowed with 100 per cent FDI. Now that the issue has been resolved with 100 per cent allowed in the telecom sector,” the official said.

“Secondly, the AGR (adjusted gross revenue) definition has to be revisited for which a reference may be required to be made to TRAI. Keeping this in view, the approval of the Telecom Commission will be sought to include IP-I in licensing regime,” the official added.

According to industry data, tower companies clocked revenues of Rs.23,580 crore in 2010-11.

As per government, bringing mobile tower companies under the licensing regime will help in reducing cost of telecom services, faster nationwide roll out of infrastructure, sharing passive as well as active infrastructure such as optical fibre network and the like, and contribute to the government’s revenue in terms of licence fee, among others.

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