Telecom minister Kapil Sibal on Thursday announced infrastructure status for the telecom tower industry. The infrastructure status would impart a slew of benefits to the tower industry.
?Along with the fixed lines, the towers have also been brought under harmonisation of infrastructure and this has been done to encourage investments in the sector which is critical to the growth of the country?, Sibal explained.
The industry, he said, was highly capital intensive and needed continuous flow of funds for expansion. ?Accelerated depreciation would enable companies to invest more and fast,? he said.
As a result of the newly acquired status, the tower industry will be permitted a higher limit on external commercial borrowing and will be able to access soft lending rates. This means the companies which currently borrow money from the markets at 12-13% interest rates for a period of five to seven years will now be able to get loans at 3-4% for 10 to 15 years, the minister explained.
Meanwhile, these companies will also be eligible for a tax holiday under the section 18 of the income tax, lower import duties on equipment and excise exemption. Other benefits would include eligibility for viability gap funding.
Bharti Infratel IPO likely by year end
Bharti Enterprises is hoping to float its $1-billion IPO for its tower arm, Bharti Infratel, by the year end as it currently awaits Sebi’s approval for its DRHP.
?We are ready to go, but, obviously, there is a process with Sebi. They have to clear that document. They are in the process of looking at it. I really can’t give a time-line but I would really like to do as soon as possible,? Bharti Enterprises deputy group CEO and managing director Akhil Gupta said at the Tower and Infrastructure Providers Association (TAIPA).
Bharti Infratel will divest 10% stake in the IPO. ?Private equity investors will offload 3% equity while the remaining 7% will be fresh equity,? Gupta said, adding the company will use the funds generated to finance expansion of its towers.
