Telecom Lead India: India government said telecom operators that win in the 2G spectrum auction will be allowed to raise cheap loans from overseas markets in the form the external commercial borrowings (ECBs).
“The successful bidders in the 2G auction would be eligible to refinance their rupee loans availed of from the domestic lenders for making the upfront payment with a long term ECB under the automatic route,” a finance ministry official said.
The bidding for 2G spectrum is scheduled to start from November 12.
Telecom operators such as Airtel, Vodafone, Telenor, Idea Cellular and Videocon Telecommunications will be competing each other for GSM spectrum. Both Tata Teleservices and Videocon exited from the bidding for CDMA spectrum.
Recently, Bharti Airtel chairman Sunil Mittal hinted that the auction is likely to end on the first day itself due to heavy spectrum fee. Due to the base of Rs 14,000 crore, several players did not show interest in bidding for spectrum.
Also, there are complains about lack of funds available from domestic banks due to 2G scam and lack of potential for growth in the Indian telecom market.
The telecom industry had been seeking further easing of the ECB norms as banks are reluctant to lend money to the sector.
To develop the telecom sector, the government in January 2010 had provided a window of 12 months to successful bidders of 2G auction for refinancing the rupee loan from domestic lenders to make payment for spectrum allocation with a long term ECB under the approval route.
“Keeping in view the large outlay of funds required to be paid directly to the government within a limited period of time, relaxation is provided for the upcoming 2G auction,” the official added.
According to an agency report, the finance ministry official said bidders can avail of short-term currency loans in the nature of bridge-finance under the automatic route for making upfront payment towards 2G spectrum allocation and replace it with long-term ECB under the automatic route, subject to certain terms and conditions.
Reliance Industries, Loom Telecom, MTS India and Aircel are not participating in the auction.
