T OWER A ND I NFRASTRUCTURE P ROVIDERS A SSOCIATION (TAIPA) 16 th June 2010 INDIA’S TOWER & INFRASTRUCTURE PROVIDERS INDUSTRY

 Who we are.  Role Played by the Tower Sharing Industry.  Government’s position on “Sharing”.  Tower Industry Not treated as Core Infrastructure.  Industry facing a Crisis.  Issues and the Way Forward. Contents 1/17

Tower And Infrastructure Providers Association  A critical member of the wireless and cellular ecosystem which is India’s showcase Industry because of our partnership with cellular and Broadband operators.  Have provided over 75000Cr of capital outlay to enable rapid deployment of networks servicing India’s 600mn mobile subscribers.  Corner stone lies in optimised sharing of critical network resources and constitutes 60-70% of the total network investments.  Provides a neutral platform for enabling entry of new players. Who We Are 2/17

 Provide the basic infrastructure to support rapid rollout of Cellular, Broadband, Radio Trunking and other wireless services.  Eliminates the need for each operator to build and maintain their own towers by promoting sharing of towers.  While initially Towers served only cellular networks, now support WiMax, Radio Trunking, Rural Broadband and providing the backbone for rural Common Service Centers.  Tower Sharing Creates many cost, scale and time saving benefits for its clients-especially ensuring highest uptime at lowest Capex/Opex. Role of the Tower & Infrastructure Providers 3/17

Situation Before Tower Sharing  Operators Built Expensive Towers for Own Use  Roll Out was Slow and Expensive  Towers Used to Barely Half Capacity  City Skyline Had More Towers  Customer Tariffs were higher 4/17

Our Mantra Is Tower Sharing Benefits of Sharing :  More efficient Use of Capital.  Reduce time to Market for rollout.  Reduce Tower Proliferation through sharing.  Better coverage quality.  Minimize Municipal and community issues.  Tower standardization by using IIT/TEC designs. 5/17

While Providing a Green Environment Solar Photo Voltaic Variable DCDG Fuel Cells  Reduction in diesel consumption and urban pollution.  Greater support for Rural rollout. 6/17

Tower Sharing Not Only Desirable But Also Represents Government’s Position  Allows Industry to optimize cost and make Telecom/Broadband services affordable services to the “Aam Aadmi”  Protects Environment & Energy savings  Improves Aesthetics  Enhances Safety TRAI’s Earlier Initiatives  Financial Incentive to Promote Infrastructure Sharing  Joint Working Groups(JWG) DOT’s Earlier Initiatives – :  USO funds for Sharing  Project Mobile Operator’s Shared Towers (MOST) 7/17

 Protect Consumer Interest  Ensure Efficient Use Of Resources through Cost Reduction  Promote Competition by Reducing Cost of Entry and Operations for Operators Especially New Entrants  Seamless Networks &  Quality Of Service Sharing Also In Line With Regulator's Objectives 8/17

 Infrastructure Status - Tax Holidays & Other Concessions.  Take steps to Mandate Authorities in-charge of Highways, Ports, Rails etc. to Share Rights of Way.  Mandate use of Shared Infrastructure, wherever available, to reduce number of towers required and protect environment.  Give incentives for deploying Alternate Energy Technologies.  Allocate out of USO Fund for every tower built / operating in Rural India – the very purpose of USO. Tower Industry Expected Government to Recognize its Critical Role & Give It Further Support 9/17

 Local Governance/Municipalities are trying to levy one-time and Annual charges & in some cases enhancing them by 20 times;  DOT levies “Testing Charge”; AND  Even TRAI recommends 6% revenue share. Tower Cos Being Taxed For “EFFICIENCY”; These Steps Will Cripple An Already Handicapped Industry The Tower Industry, which has 75,000 crores invested and it does not even earn its cost of capital. The above steps to tax it further will bankrupt the industry and hurt Telecom/Broadband Growth. 10/17

 Assumption – 1 There is a leakage of revenue to Government Due to payments by operators to Towercos. Fact Expenditure for Tower services are not deducted from AGR calculations. Hence no leakage.  Assumption – II Since total billing of Towercos is large, they are assumed to be making large profits. Fact (1) Almost 40-45% of total billing is for energy which is a pass-through and on which Towercos actually incur loss. (2) Overall return on Capital Employed is negative for the Industry. TRAI’s proposal seems to based on wrong assumptions 11/17

 Assumption – 3 Since Towercos have got registered with DOT as IP-1s, there is an obvious right to levy Licence Fee. Fact Licence Fee can be levied only for activities / services as per Indian Telegraph Act. If any service / activity related to Telecom can be subjected to Licence Fee, it should also be levied on : - managed service providers (Ericsson / Nokia / Siemens etc) - equipment providers (Ericsson / Nokia / Siemens etc ) - IT service providers (IBM, Wipro, HCL, Infosys) - BPOs (several) - even manufacturers of DG sets, steel, cement etc. TRAI’s proposal seems to based on wrong assumptions Contd… 12/17

 Assumption – 4 That this Infrastructure can only be used for Teleccom and hence Licence Fee by Telecom Regulator. Fact The Towers and related Infrastructure can be and will be used for many industries – e.g, Broadcasting, security services, banking, advertising etc. TRAI’s proposal seems to based on wrong assumptions Contd… 13/17

 TRAI recognises that a levy of Licence Fee would result in Double Taxation.  Yet, it leaves that aspect to Government to decide.  TRAI should take a holistic view and decide on Double Taxation aspect also and allow payments to Towercos as deductions for operators. TRAI proposal lacks end-to-end holistic approach 14/17

 Will Be Compelled to Pass Increased Cost of new Levy to Mobile Operators which in turn will raise consumer tariffs.  Will make further Rollout of towers totally uneconomical.  Will negatively impact rural coverage and plans for wireless broadband in rural areas. Implications For Tower Industry 15/17

 Possible Higher Tariffs  Slower Rollout of Communication Services  More Towers than Necessary because of less sharing  More Pressure On Environment  Threat to Skyline Implications For Consumers & Society 16/17

 Drop Plan to levy 6% Licence fees on IP-1s.  Single Window Municipal Clearances/JWG: Streamlining The Role And Functions Of Multiple Agencies.  Set up Agency to Remove Barriers to Growth – Accord Infrastructure Status to Tower and Infrastructure Providers.  Additional incentives for Sharing.  Subsidies for Environment Protection and use of alternative energy.  Innovative usage of USO funds to progress rollout in rural areas and promote wireless broadband. The Way Forward 17/17

T OWER A ND I NFRASTRUCTURE P ROVIDERS A SSOCIATION (TAIPA) 16 th June 2010 Thank You