Spectrum can be pledged for bank loan

Our Bureau New Delhi | Updated on November 16, 2017 Published on July 12, 2012

The Empowered Group of Ministers, headed by the Home Minister, Mr P. Chidambaram, has allowed telecom companies to mortgage spectrum as collateral to raise funds from banks. The banks will be given the rights to own or sell the spectrum in case the telecom company defaults.

The Department of Telecom will monitor such sale of spectrum by the banks.

But the Ministers’ Group once again failed to take a decision on the crucial issue of fixing the reserve price for the upcoming spectrum auction. The delay in decision will make it difficult for the Government to meet the August 31 deadline set by the Supreme Court.

The EGoM is expected to meet again early next week.

Briefing reporters after the meeting, the Telecom Minister, Mr Kapil Sibal, said that all effort will be made to meet the deadline. But according to sources, the DoT may seek an extension of the deadline from the apex court.

During the meeting on Thursday, the TRAI Chairman, Dr Rahul Khullar, made a presentation on how its proposed base price of Rs 18,000 crore would impact tariffs. The operators have been putting pressure on the Government to reduce the amount by 80 per cent.

The EGoM also did not take a decision on the one-time fee to be imposed on incumbent players. The DoT had moved a proposal to charge a fee from incumbent operators for the entire spectrum they hold for the balance period of the 20-year licence. It had given various options including asking operators to pay only for spectrum above 6.2 Mhz.

Even as the uncertainty continues, the telecom industry welcomed the decision to consider spectrum as a tangible asset. Telecom companies have been finding it tough to raise funds post the 2G licence scam. Banks which lent money to the new players are now stuck with the possibility of large-scale defaults. To break the impasse the Reserve Bank of India and the Finance Ministry had suggested allowing telecom companies to mortgage spectrum.


Published on July 12, 2012
This article is closed for comments.
Please Email the Editor