Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quezon City

SEVENTEENTH CONGRESS
Second Regular Session

House Bill No.7410

INTRODUCED BY REPRESENTATIVE ARTHUR C. YAP

The Department of Information and Communications Technology (DICT) reported that
to date, the Philippines has one of the lowest cellular tower densities in the world, with
less than 20,000 towers serving a population of 105 million people.

According to Globe Telecom, user-per-site density in the Philippines is about 2,244,
based on estimates of 21,000 total cell sites against internet users of around 47.1

million. Vietnam, which is similar in size to the Philippines, has a much lower user-per-
site density of only 860 based on a total number of 55,000 cell sites against 47.3 million
internet users. Malaysia, with a 22,000 cell sites against 20.6 million internet users, has a
user-per-site density of 937. Japan, with 220,000 cell sites against 115 million internet
users, has a user-per-site density of 522 while China, with 1.18 million cell sites against
688 million internet users, has a user-per-site density of 566.

This is mainly the reason why the Philippines has the slowest internet speed in ASEAN
More cellular towers in an area will de-congest the network traffic which improves the

internet speed.

This shows that wireless infrastructure plays a crucial role in how businesses, citizens and
governments operate. These networks are critical to everything from education and
business to public safety and health care

In recent years, the mobile Internet penetration rate is growing at a rate of 1.5x (or 30
million users) and consume about 150k terabytes of every year.
(https://www.rappler.com/brandrap/profile-internet-users-ph)

To support this massive growth in usage, today’s wireless networks require robust
wireless infrastructure. Wireless infrastructure provides the foundation upon which the
wireless industry will deliver the applications, services, and jobs that will fuel the
Philippine economy for years to come. Hence, it is critical for policy makers to continue
to support the wireless infrastructure industry through prudent policies.

According to a 2016 World Bank Study entitled “Exploring the Relationship Between
Broadband and Economic Growth”, a 10% increase in fixed broadband penetration
would increase GDP growth by 1.21% in developed economies and 1.38% in developing
ones.

In the United States, wireless infrastructure providers, the largest being organized as real
estate investment trusts (“REITs”) have played a key role in wireless infrastructure
funding for years. As REITS, these companies are able to drive the industry forward with


increased investments as wireless carriers demand more network capacity to deliver their
growing lists of mobile services to customers.

In the Philippines, Real Estate Investment Trusts (“REITs”) was created Dec. 17,
2009 Republic Act No. 9856 also known as the Real Estate Investment Trust Law of
2009 lapsed into law. However, despite the excitement during the passage of the REIT
law, we still have a dearth in the REIT market to date.

One of the main reasons is the imposition of the 12% VAT on the transfer of real
property to a REIT even if the transfer is a tax free exchange. However, one amendment
introduced by the TRAIN law may help push the development of the REIT market in the
country. Section 109 of the Tax Code has been amended to include transfers of property
under Section 40 (c) (2) of the Tax Code or tax-free exchanges as exempt from value
added tax. The TRAIN amendment directly addresses one of the main reasons cited by
property developers as hindrance to forming REIT corporations. With the amendment,
property owners can now transfer qualified real property assets to the REIT corporations
without incurring the 12% value added tax.

Hence, the creation of REIT corporations for cellular towers may now provide
new capital for wireless telecommunications infrastructure investments. This bill seeks to
mandate all telecommunications company to transfer their cell towers to REIT
corporations.

In view of the foregoing, the immediate passage of the bill is earnestly sought.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Second Regular Session

n 7410

House Bill

INTRODUCED BY REPRESENTATIVE ARTHUR C. YAP

AN ACT
MANDATING THE WIRELESS TELECOM
COMPANIES TO TRANSFER FIVE YEAR OLD CELL
TOWERS TO REIT CORPORATIONS

Be it enacted by the Senate and House of Representatives of the Philippines
in Congress assembled.

SECTION 1. Title. - This Act shall be known as the "TELECOM
TOWER REIT ACT".

SEC. 2. Declaration of Policy. — It is the policy of the State to
recognize the vital role of communication and information in nation-
building,to promote the development of the capital market and use it as an
instrument to help finance and develop infrastructure projects.

SEC. 3. REIT. — All telecommunications companies are hereby
mandated to transfer all their over five year old telecom towers to a Real
Estate Investment Trust (REIT) corporation in accordance with Republic Act
No. 9856, otherwise known as “The Real Estate Investment Trust Act of
2009.”

SEC. 4. Coverage. - This Act shall cover all telecom towers that are at

least five years old and above upon the effectivity of this Act.


SEC. 5. Implementing Rules and Regulations. - The DICT in
coordination with the SEC shall promulgate the necessary rules and
regulations for the effective implementation of this Act.

SEC. 6. Separability Clause. - If any provision of this Act is declared
unconstitutional or invalid, other parts or provisions hereof not affected
thereby shall continue to be in full force and effect.

SECTION 7. Effectivity. - This Act shall take effect fifteen (15) days
from its complete publication in the Official Gazette of in a newspaper of
general circulation in the Philippines, whichever comes earlier.

APPROVED.