Telcos can now tap ECB for 2G shopping
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The government on Friday issued guidelines allowing telecom firms to borrow from abroad to refinance loans taken for 2G spectrum payment without RBI\'s approval.
Companies can now raise long-term loans from foreign markets and lenders under the automatic route for refinancing rupee loans as well as short-term foreign currency loans for making upfront payment.
Before liberalization, refinancing of rupee loans taken for spectrum payment with external commercial borrowing (ECB) was allowed only under the approval route, that too if raised within 12 months from the last date of payment to the exchequer.
The finance ministry said the norms will come into effect once the RBI issues a circular liberalising the ECB policy within a week. "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\' subject to certain conditions," the finance ministry said in a statement.
The 2G auction is slated to begin from November 12. The minimum bid price is R14,000 crore for 5 Mhz of airwaves for all the 22 telecom zones.Such bidders can also avail of short-term foreign currency loan in the nature of bridge finance under the \'automatic route\' for the purpose of making upfront payment towards 2G spectrum allocation and replace the same with a long-term ECB under the \'automatic route\' subject to certain terms and conditions.
The successful bidders will also be allowed to avail of ECB from their ultimate parent company without any maximum ECB liability-equity ratio under the \'automatic route\' subject to certain riders.
The telecom industry had demanded relaxation of ECB guidelines with banks expressing reservations in financing them. Now, ECB is in the telecom sector is allowed for one-time payment for spectrum allocation without RBI clearance.
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