The Telecom Tower industry which is just 5 years old continues to face major challenges since its inception particularly from the regulatory authorities. The tower industry has invested around 1 lac crore so far and still struggling to recover the cost. The new regulatory changes are likely to affect the bottom line of the tower companies. During the last one year, the industry could not add any tower due to the uncertainty in the telecom market caused by 2G Scam. Many new telcos which started operations in 2008 are in the process of winding up their business, resulting in reduction of tower sharing ratio. Tower companies have taken some of the Telcos to the court for breach of contract.
Diesel consumption and carbon emission
Due to the erratic power supply and non availability of grid electricity in rural areas, nearly 60% of 400,000 towers depend on diesel generators. Telecom tower industry is one of the major contributors to carbon emission in the country as they consume nearly 2 billion litres of fuel every year. TRAI has directed that at least 50% of all rural towers and 20% of the urban towers should be shifted to hybrid power by 2015.
Telecom industry is planning to meet this timeline by setting up independent renewable energy companies that will generate and supply green power to run towers. Taipa, the industry association representing tower infrastructure providers, is working on a project that will save the cost of diesel for running towers especially in areas where grid electricity is not available
Several measures have been initiated so far to reduce the carbon emission by producing power from solar energy, fuel cells and other renewable sources. Bharti Infratel has reported that it saved 25.64 million litres of diesel after powering 12,000 tower sites with solar energy.
Tower companies to come under Unified Licence Scheme
The recent recommendation of TRAI to bring all tower companies under unified licence scheme has caused anxiety among the tower companies as it will result in payment of 8% revenue share to the Government. TRAI has estimated that additional revenue on this account will be around Rs 1900 crore. The industry wants only an option and not a mandate to migrate to the unified licence scheme.
Likely reduction in FDI
Other changes like reduction of FDI to 74% from the current 100% is likely deter foreign investment and also the existing shareholding pattern of some of the tower companies
Approvals from authorities for erecting towers
At the time erecting towers, the companies have to go through multiple clearances and levy of fees by local authorities like Municipal Corporation, panchayat, state government etc. There is a huge delay for granting permissions. The procedure and the fee vary from state to state and even from one municipality to another within the state. Many consumer forums and residential associations are opposing the tower erection in their area due to the fear radiation from towers.