Telecom Infrastructure Sector Budget Wish List

By Mr. Amit Sharma, EVP and President, Asia – American Tower Corporation

The Cabinet Committee of Infrastructure (CCI) recognized the importance of ‘telecommunication towers sector’ and included it in the Harmonized Master list of Infrastructure sectors vide its gazette notification dated 27th March, 2012. However, till date, no tax or fiscal benefit has been granted to Telecom Infrastructure sector.

2016 was power packed with significant developments such as 4G rollouts across the nation which jump started the data growth in the country. Meeting the rapidly growing demand for 4G data will require Carriers to continue to upgrade networks in 2017/18 and in turn this will need significant rollout of new and infill sites.

Unprecedented increase in adoption of digital services like payments, e-governance and entertainment will necessitate further investments in the telecom infrastructure sector. Without infrastructure status benefits like tax / financing benefits, the industry will not be able to afford these long payback investments. Hopefully, the new budget will correct that.

• Relaxation of ‘refinancing’ and ‘end use’ of External Commercial Borrowing (ECB): Telecom Infrastructure sector be allowed to refinance the existing ECB loans meeting loan conditions. Further the ‘end use’ of ECB should also be relaxed to include brownfield investments and acquisitions. The sector should also be made eligible for issuing Tax Free Bonds and access to long term low cost debt from Infrastructure Debt Funds (IDFs).
• Inclusion of telecom infrastructure service providers within the meaning of the term ‘industrial undertaking’ for the purposes of section 72A of Income Tax Act: To allow accumulated losses and unabsorbed depreciation in the hands of the Telecom Infrastructure companies similar to the benefit granted in 2002 to Telecom Service Providers.
• Increase in tax depreciation rate from 15 per cent to 65 per cent on batteries for industrial or commercial use (used as power back up for telecom towers) to ensure cost recovery within three years' economic life of the batteries
• Petroleum and diesel to be brought within the ambit of GST so that the duties paid on it are available as 'credit'