With 3G services not taking off as expected, operators have sought permission from the Reserve Bank of India to raise additional External Commercial Borrowings to service their debts.
In 2010, the Finance Ministry had given a one-time relaxation to the ECB rules allowing telecom companies bidding for the 3G spectrum to pay the fees in rupees and then raise overseas funds over a period of 12 months. This brought much-needed relief to cash strapped telecom players as most of the 3G bid amount was partially refinanced through ECB.
Telecom companies now want this relaxation to be given time for six more months. The Association of Telecom Services Providers of India (AUSPI) has sent a proposal to this effect saying that since it was difficult for all players to arrange ECB in a single tranche, operators should be allowed another opportunity.
AUSPI represents the interest of Tata Teleservices and Reliance Communications.
When contacted Mr S.C. Khanna, Secretary General, AUSPI, confirmed the move. But rival industry body the Cellular Operators’ Association of India said that this was not a major concern for GSM players.
According to an internal Department of Economic Affairs note, the AUSPI has stated that the large amount of debt taken by operators to pay the 3G spectrum the funding cost has gone up significantly causing financial hardship in the absence of its matching revenue as envisaged earlier.
The note said that in 2010 the lenders could not take long-term exposure in the telecom sector due to a combination of reasons including regulatory uncertainty and risk aversion of lenders due to financial crisis in Europe. “The industry is still carrying sizeable amount of rupee debt at a high rate of interest,” the note stated.
tkt@thehindu.co.in