- Operators' requests may fall on deaf ears - Rs. 200,000 per tower per annum By Charindra Chandrasena The telecom tower levy, which was first proposed in the 2018 Budget, is set to come into effect from 1 January, 2019 (Tuesday) as originally planned, despite repeated appeals by the mobile telecommunication sector for it to be reconsidered. Accordingly, a levy of Rs. 200,000 per tower will be imposed per annum on every mobile telephone operator who owns and uses cellular towers according to the Finance Act 2018, gazetted on 10 August, 2018 and approved by the Cabinet on 18 September. This Act relaxed the original plan contained in the 2018 Budget to impose a monthly levy of Rs. 200,000 per tower on the operators after the Government took into account industry concerns. The tower levy had not been a point of discussion for several months, leading to speculation that it had been abandoned by the Government amidst intense industry pressure. However, Telecommunication Regulatory Commission of Sri Lanka (TRCSL) Deputy Director/Competition Division (Interconnection and Sector Analysis) H.W.K Indrajith told The Sunday Morning Business that the telecom tower levy would be coming into effect from 1 January, 2019. Dialog Axiata CEO Supun Weerasinghe said he expects this to be a short term tax. “In terms of both direct and indirect taxes Dialog paid Rs. 38 billion in 2017 and the proposed Cellular Tower Levy, effective 1st January, 2019 will further enhance the contribution of the telecommunication sector to the Government of Sri Lanka. We envisage this to be short term tax aimed at bridging the revenue deficit of the government and acknowledge that the initial tax proposal has been amended to Rs. 200,000 per tower, per annum, whilst encouraging tower sharing by distributing the tax amongst multiple tenants occupying the tower. At the same time, we are concerned on the long term implications of the tower tax on rural connectivity and look forward to consistency in taxation policies going forward.” Sri Lanka Telecom Mobitel CEO Nalin Perera told The Sunday Morning Business that Mobitel made requests to the TRCSL to reconsider the levy as the operators are already burdened by high taxes. “We invest in lots of infrastructure on a Year-on-Year basis. Improvements in the telecommunication sector directly contribute to a country’s economy. Looking at the future development plans of the country we expect a favourable reply to our requests. Especially with new technology like 5G coming in we need more and more towers.” Hutchinson Telecommunication Lanka CEO Thirukumar Nadarasa said that he understood the reason behind the levy and why the Government had to resort to it. “This is part of the annual budget proposal. It will not really be a discouraging move. Now mostly we are sharing the towers. We have to appreciate that the Government also has to collect some revenue to run the country. We understand the bigger issue here. We have to play our part.” As stated by the Treasury at the time of the initial proposal, nearly 6,750 towers were used by the five mobile operators to support the needs of a population of 20 million. However, each tower can only support the equipment of two-three operators due to tower loading constraints. According to a joint statement by the industry, a tower costs more than Rs. 10 million to build and Rs. 115,000 a month to maintain (including electricity, security, and site rent) and as such, operators would naturally be extremely cautious about building unnecessary towers. The Government’s aim of introducing this levy was to reduce the number of new towers mushrooming and proliferating countrywide. All operators already have a large number of loss-making towers in rural areas. These losses will be significantly augmented if the proposed levy were to be implemented, making them economically unviable to sustain, the statement added.