Telecom towers guzzle Rs 1,200 cr worth of taxpayers' money a year | business | Hindustan Times
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Telecom towers guzzle Rs 1,200 cr worth of taxpayers' money a year

business Updated: Feb 05, 2014 23:15 IST
Telecom companies

Did you know that, each year a hefty Rs 1,200 crore of taxpayers’ money is used to subsidise the operations of telecom companies, not directly, but through cheap subsidised diesel used by operators to run telecom towers.

Operators do not explain this on your mobile phone bill, even as they charge almost 30% as taxes. For example, on every litre of diesel sold by the oil companies at Rs 54.91 (in Delhi), the government subsidises as much as Rs 9 through the taxpayers money.

The power generated for telecom towers using subsidised diesel at Rs 12-14 a unit — against power from grid at Rs 4-6 a unit — puts an extra burden on mobile phone users as energy costs account for 30-34% of the total operational expenditure for a telecom tower company. As only 40% of the power requirements of telecom companies are met from the grid, they opt for power coming from diesel-based gensets.

According to petroleum ministry, this high cost energy can be replaced by low-cost greener options in alternative energy using renewable resources. This, it said, will not only ease pressure on margins of telecom companies but also bring down telecom tariffs, thereby benefiting end users.

The argument by petroleum ministry is based on a report prepared by Tata Strategic Management Group on use of green fuel for meeting the power requirements of telecom firms.

“It’s estimated that telecom towers alone consume about 1.3 to 2 million kilo litres of diesel per year...even considering the conservative figure of 1.3 million kilo litre of diesel consumption by telecom towers, they account for about Rs 1,200 crore of under-recoveries (or losses compensated as subsidies) provided by the government,” according to a note prepared by the ministry.
There are 6.5 lakh telecom towers and it is estimated that the total number of telecom towers would reach 10 lakh by 2017.