DoT may start conditional registration of mobile tower companies

The DoT is planning to start conditional registration of mobile tower companies, IP-1 providers, a move that would facilitate entry of new investment in the telecom sector. The registrations have been on hold due to pending decision on their permits. "IP- 1 registration may be continued in its present form till resolution of issues," Official sources said.

Registration of mobile tower firms has been on hold after Telecom Regulatory Authority of India (TRAI) recommended bringing these companies under telecom licences and imposing 8 per cent tax on them under the new licencing regime at par with other service providing firms. The recommendation from TRAI was opposed by industry players saying that they provide services to multiple sector and not just the telecom segment.

Industry players also raised issue that there are many companies in the segment that have 100 per cent Foreign Direct Investment and it will have to be reduced to 74 per cent if the segment is brought under licencing regime. The Department of Telecommunications (DoT) has proposed to start registration of new cases in the segment with an undertaking from the firms that "should impose a responsibility on the new IP-1 providers to migrate to UL (Unified Licences), abide by the attendant obligations and payment of licence fee at the rate of 8 per cent adjusted gross revenue."

Inter-ministerial body Telecom Commission, however, has given nod to raise FDI limit in telecom sector to 100 per cent from 74 per cent at present. If this is approved by Cabinet, it will resolve shareholding issue of foreign firms operating in the segment. Besides this, mobile tower firms are also looking at allowing telecom operators to show charges paid by them to IP-1 for renting mobile towers and other infrastructure as expenditure in AGR definition under revised by TRAI.

An industry source said: "Present AGR rules do not allow operators to show charges paid to IP-1 as expenditure. Showing it under expenses head will avoid telecom operators from paying double taxation of 8 per cent."