RBI accords infra status to telecom tower firms

The Reserve Bank of India’s decision to consider telecom towers as infrastructure is expected to provide a fillip to tower companies such as GTL Infrastructure, Viom Networks and Indus Towers, which build and lease towers.

The move will improve their access to funds from non-banking finance companies (NBFCs) for expanding the tower base just as the telecom sector enters a new phase with the launch of 3G (third generation) services and prepares to launch high speed data networks using 4G (fourth generation) technologies, all of which would generate higher demand for towers in the near to medium term.

A central bank circular on Thursday said, “It has now been decided to include telecom towers also as an infrastructure facility for availing credit facility.”

“This is something telecom companies have been rooting for at least a year now,” Sunil Kanoria, vice chairman of SREI Infrastructure Finance Ltd, said. “Telecom tower companies will now be eligible for loans under the infrastructure finance schemes of non-banking finance companies, which they were not eligible for earlier.”

“Generally infrastructure loans have better repayment terms, and sometimes a fixed repayment moratorium as well, considering most infrastructure projects have long gestation periods,” said Romal Shetty, executive director at the Indian arm of advisory services firm KPMG.

“With the current uncertainty that is affecting the telecom sector, firms from the sector have been facing difficulties in getting loans. This will likely ease that a little bit,” said Shetty.