In an effort to support funding for telecom facilities, the Reserve Bank of India declared that telecom towers will be treated as infrastructure facility, to get credit from non-banking finance firms. The RBI circular is more in the form of a clarification to remove any ambiguity. NBFCs have been extending credit to telecom tower firms treating it as infrastructure. NBFCs look at this segment positively, since lending to tower firms is a lot more secure. Their cash-flows are predictable as they are backed by long term rental agreements. The infrastructure status being extended to telecom towers will boost the backbone of the industry and help extend reach to rural areas at affordable prices.
According to the rating agency Icra, the Indian telecom industry has seen significant growth in subscriber base in the last decade due to increasing network coverage and a competition-induced decline in rate-paying facilitators.
As a consequence the intensity of competition has grown, forcing the telecom operators (telcos) to look for cost-cutting measures.