Hit hard by the government’s decision to impose a one-time levy on telecom companies, especially GSM players like Bharti Airtel and Vodafone, for holding spectrum beyond 4.4 MHz, the Centre on Friday gave a breather to telcos by allowing them to refinance their rupee loans for upfront payment with cheaper and long-term 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,” the Finance Ministry said.
Not only that the operators are also allowed to utilise ECBs raised by their parent companies for the purpose. Besides, the successful bidding operators will be allowed to avail ECB raised by their parent company without any maximum ECB liability-equity ratio.
In 2010, the government had allowed a window of 12 months to the successful bidders of 3G auction to refinance the rupee loans. The Reserve Bank is expected to issue relevant circular to this effect within a week.
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.
The bidding for 2G spectrum auction is scheduled to start from November 12. The telecom industry had been seeking further easing of the ECB norms as banks are reluctant to lend money them.
In order to develop the telecom sector, the government in January 2010 had provided a window of one year to successful bidders for refinancing the rupee loan.