The government on Monday loosened overseas borrowing rules to make it easier for mobile phone companies to finance payment of the fee for the upcoming auction of 3G wireless spectrum. The finance ministry said in a statement that successful bidders will be allowed to pay the fee in rupees and refinance it with a long-term overseas loan within 12 months. The government had earlier permitted telecom firms to tap external commercial borrowings (ECB) to pay for spectrum allocation.
“This will enable telcos to raise funds for the forthcoming 3G auctions at an affordable rate. It will also provide them greater flexibility with regard to their financing options and the industry therefore welcomes it,” said TR Dua, officiating director general of the Cellular Operators Association of India, the industry body representing all GSM service providers in India. Successful bidders must pay 25% of the bid amount within five days of the close of the auction and the rest within 15 days.
The statement said ECB norms have been relaxed considering the short window available between the date of application for the 3G auction and the date of payment by successful bidders. The government has fixed Rs 3,500 crore as the minimum bid price for all-India 3G spectrum, and the auction is expected to be completed before the end of March.
“The government wants to ensure that participants do not face any shortage of funds. The move will also lead to aggressive bidding,” said Sunil Sinha, senior economist at Crisil.
The 3G auction is expected to fetch the government about Rs 35,000 crore, helping it in its struggle to manage the fiscal deficit, which is estimated at a 16-year high of 6.8% for 2009-10. The overseas borrowing to pay for spectrum will happen through the approval route, and will not be eligible for any guarantee from domestic banks.
Source : http://economictimes.indiatimes.com/news/news-by-industry/telecom/3G-winners-to-get-easy-overseas-loans/articleshow/5500912.cms
“This will enable telcos to raise funds for the forthcoming 3G auctions at an affordable rate. It will also provide them greater flexibility with regard to their financing options and the industry therefore welcomes it,” said TR Dua, officiating director general of the Cellular Operators Association of India, the industry body representing all GSM service providers in India. Successful bidders must pay 25% of the bid amount within five days of the close of the auction and the rest within 15 days.
The statement said ECB norms have been relaxed considering the short window available between the date of application for the 3G auction and the date of payment by successful bidders. The government has fixed Rs 3,500 crore as the minimum bid price for all-India 3G spectrum, and the auction is expected to be completed before the end of March.
“The government wants to ensure that participants do not face any shortage of funds. The move will also lead to aggressive bidding,” said Sunil Sinha, senior economist at Crisil.
The 3G auction is expected to fetch the government about Rs 35,000 crore, helping it in its struggle to manage the fiscal deficit, which is estimated at a 16-year high of 6.8% for 2009-10. The overseas borrowing to pay for spectrum will happen through the approval route, and will not be eligible for any guarantee from domestic banks.
Source : http://economictimes.indiatimes.com/news/news-by-industry/telecom/3G-winners-to-get-easy-overseas-loans/articleshow/5500912.cms
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