India may cap foreign tower co ownership

Dylan Bushell-Embling
14 Feb 2012
00:00
News
Daily News

Indian lawmakers are considering a cap on foreign ownership of telecom tower companies, a move that could cause more issues for current or potential foreign investors in the market.

Telecom regulator TRAI has recommended the government limit foreign direct investment in local tower companies to 74%, Economic Timessaid.

Currently, tower companies are allowed to be 100% foreign-owned. The proposed change would bring the ownership limits in line with those of other telecom services including mobile operations.

But such a move could cause problems for tower giant American Towers Company (ATC), which currently operates a 100%-owned Indian subsidiary.

It could also limit the ambitions of domestic operators looking to leverage their tower assets to address debt and competition pressures.

Reliance Communications, for example, has long been hunting for buyers for tower arm Reliance Infratel. Incumbent operator Bharti Airtel has meanwhile been considering floating its own tower business in an IPO.

More broadly, the proposed change would be one more complication for any foreign players involved in or considering a foray into the market.

As if overcrowding in the mobile sector wasn't enough, foreign players have already been discouraged by the recent cancellation of 122 telecom licenses, with Bahrain's Batelco becoming the first to walk.

While it eventually won the case, Vodafone's protracted tax battle with the Indian government would also give potential investors pause for thought.

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