TC backs spectrum cap changes; TAIPA warns of rising deployment costs

10 Jan 2018

India’s Telecom Commission (TC) – the highest decision-making body at the Ministry of Communications – has reportedly endorsed the regulator’s proposals to modify spectrum holding caps, the Economic Times writes, citing a senior official. The Telecom Regulatory Authority of India (TRAI) had made recommendations in November last year to alter the spectrum holding allowances, which currently limit providers to 50% of the allocated spectrum in a particular band per circle, and up to 25% of spectrum across all bands per circle. Under the TRAI’s proposals, operators would instead be permitted to claim up to 35% of the allocated frequencies within each circle, and up to 50% on combined sub-1GHz frequencies (i.e. the 700MHz, 800MHz and 900MHz bands), with no limit on per-band holdings for the higher frequency ranges.

In addition, the TC has endorsed plans to provide cellcos with further relief in the form of a reduction to the interest rate on penalties and outstanding dues from 14% to 12%, as well as a increase to the tenure for spectrum purchased at auction from twelve years to 16. Having received the TC’s approval, the proposals must now be approved by cabinet before coming into force.

On the other side of the coin, however, industry lobby group the Tower and Infrastructure Providers Association (TAIPA) has warned that the exclusion of telecom towers from certain tax relief measures under the Goods and Services Tax (GST) regime could lead to a nearly 10% increase in costs for cellcos. ‘The telecom towers are the backbone of the telecom industry and any denial of this credit would substantially increase the cost of providing this service to the common man,’ TAIPA’s director general Tilak Raj Dua was quoted as saying. The official claimed that the exclusion would add a tax burden of between INR100,000 and INR150,000 (USD1,572 to USD2,359) to the deployment of each tower.