As per the new decision from Department of Telecom (DoT), mobile operators in India cannot use spectrum as collateral to borrow from banks.
The Telecom Ministry has vetoed a move to sign a tripartite agreement that could allow operators to use spectrum as collateral, saying private players cannot pledge natural resources to lenders, Times of India reported.
The decision, the newspaper reports, will bring another blow to the cash-starved telcos. It is likely to impact the upcoming spectrum auction. Several major operators are under severe financial stress, limiting their capacity to raise funds for the auction. It is estimated that the telecom industry in India has a debt of Rs 2.6 lakh crore.
DoT objected to the demand of telcos due to the fact that in case of a default by the operators, the banks will gain control over this national resources. As revealed by DoT officials, Telecom Ministry is the “requisite authority” to take care of airwaves, so the control and the escalation in the value of spectrum should vest with it.
The tripartite agreement was supposed to be signed by the mobile operator, banks and DoT. A doT source was quoted saying that the agreement has emerged as the next area of conflict between DoT and the banking industry.
“The issue remains unresolved as there is no clarity on who gets control over airwaves in case of a default. DoT is not ready to give this control to banks and has refused to sign such agreement,” the official said to Times of India.
The matter is now with the Ministry of Finance, which may try to settle the issue between DoT and the banking industry. However, the matter is not likely to be resolved before the spectrum auction begins in February.
Baburajan K
editor@telecomlead.com
