In an effort to support funding for telecom facilities Reserve Bank of India on Thursday said telecom towers will be treated as infrastructure facility, to get credit from non-banking finance firms.
A senior official with an infrastructure finance company said NBFCs have been extending credit to telecom tower firms treating it as infrastructure. The RBI circular is more in the form of a clarification to remove any ambiguity.
NBFCs look at this segment positively, since lending to tower firms is a lot more secure. Their cash-flows are predictable as they are backed by long term rental agreements, he said.
Senior GTL executive said the infrastructure status being extended to telecom towers will boost the backbone of the industry and help in spreading telephony to the rural areas at affordable prices. GTL Infrastructure Ltd is among the top 10 players in the telecom tower business.
According to rating agency Icra, the Indian telecom industry has seen significant growth in subscriber base in the last decade due to increasing network coverage and a competition-induced decline in rate-paying facilitators.
As a consequence the intensity of competition has grown, forcing the telecom operators (telcos) to look for cost-cutting measures. One such measure has been the hive off of telecom tower related operations into separate companies to allow for greater operating efficiencies and tower sharing.
More From This Section
While there are over 50 independent telecom tower companies in India, most of them have a small tower portfolio. The top six telecom tower companies hold more than 90 per cent of the country’s total tower portfolio.
Nevertheless, the small tower companies compensate for their smaller portfolio by offering towers concentrated in a particular geography, which makes it easier for them to attract telcos looking to rollout services in that location.