04:56 am - Thursday 27 April 2017

Report: Rebate on license fee may be offered by DoT to telecom companies building environment friendly towers

By insightVAS - Fri Jun 14, 10:55 am

According to two top Executives aware of the development, in lieu of building more expensive and environment friendly telecom towers, the telecom companies may get a rebate of two percentage point on license free levy. 

The Department of Telecommunications (DoT) is considering lowering the levy from the currently 8 percent of adjusted gross revenue, they said.

“Incentivising green energy initiatives by telcos was discussed recently at an internal DoT meeting, and one of the options suggested was offering licence fee relief to cross-subsidise telecom operator investments since the cost of harnessing green power is prohibitive in the initial years,” a Senior Executive of a leading tower firm present in this meeting told a news source.

Approvals from the Planning Commission and the Department of Economic Affairs (DEA) to provide relief to mobile phone companies will be needed, since “the capex needed to shift to renewable energy is formidable until economies of scale are achieved,” said one Executive, quoting the minutes of the DoT meeting.

The DoT, however, has ruled out any USOF subsidy for the proposed green energy initiatives by telcos, despite the fact that mobile phone companies contribute 5 percent of their annual revenue to the USOF corpus. The telecom companies pay around an amount of Rs 10,000 to Rs 11,000 as annual licence fee and a 2 percent rebate would reduce such payout by Rs 2,000 crore.

“This money can be used by telcos to run close to 66,000 mobile towers on renewable energy,” added another Executive who was present in the meeting chaired by DoT Additional Secretary.

At present, the cost of powering each mobile tower with renewable energy is roughly Rs 10 lakh and the viability gap funding required is roughly 30 percent or Rs 3 lakh per tower.

Accordingly, “a Rs 2,000 crore reduction in annual licence fee payout can help meet the viability gap funding for running as many as 66,000 mobile towers on renewable energy,” said another Executive of a leading GSM carrier.

The discussion on incentivising green energy initiatives was triggered by the telecom department’s refusal to ease the targets on using green energy to power mobile towers by 2015. The department has mandated mobile phone companies to run 50 percent of all cell towers in rural zones and 20 percent in urban zones with hybrid power, using a mix of grid support and renewable energy like solar to reduce carbon emissions by 8 percent. At present, there are over 4,00,000 mobile towers across India and barely 4000-odd run on a hybrid solution of diesel with a solar back-up facility.

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