Telecom tower companies to get ‘infrastructure loans’

18 Mar 2011

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Non-banking finance companies (NBFCs) have been allowed by the Reserve Bank to classify credit extended to 'telecom tower' companies as infrastructure loans.

''It has now been decided to include telecom towers also as an infrastructure facility for availing credit facility,'' RBI said in a notification. 

Infrastructure loans mean a credit facility extended to a borrower, by way of term loan or a project loan and is extended in the form of advances. Infrastructure projects under the Reserve Bank definition include roads, highways, ports, telecommunication services, industrial parks or special economic zone and power sector among others.

Analysts say the move would provide a fillip to tower companies including GTL Infrastructure, Viom Networks and Indus Towers, which build and lease towers.

The move would help improve the firms' access to funds from non-banking finance companies (NBFCs) for expansion of the tower base, with the sector entering a new phase of 3G (third generation) services.  Meanwhile, preparations are also under way for the launch of high speed data networks using 4G (fourth generation) technologies.

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

Analysts say this is something telecom companies have been asking for at least over a year now. They say telecom tower companies would now be able to get loans under the infrastructure finance schemes of non-banking finance companies, which they were not eligible for earlier.
 
They add that infrastructure loans generally came with better repayment terms and at times a fixed repayment moratorium as well, considering most infrastructure projects had long gestation periods.

They add, with the current uncertainty affecting the telecom sector, firms from the sector had been facing difficulties in getting loans which would likely ease a little bit.

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