The government will allow telecom firms to borrow from overseas markets for buying second generation (2G) spectrum when auctions come up next week, economic affairs secretary Arvind Mayaram said Thursday.
The move to ease external commercial borrowing rule is likely to relieve some of the debt-ridden companies eager to buy more spectrum to expand their reach in a fiercely competitive telecom market while ensuring that the government gets a good price to rein in the fiscal deficit.
“We have now allowed companies to raise funds through the ECB route for making one-time payment. Large number of companies would like to do that to raise cheap money from abroad. They can raise ECB for the entire amount required for spectrum purchase,” Mayaram told reporters on the sidelines of World Economic Forum.
It is expected that notification, allowing the the new ECB proposal, would be issued post completion of of the spectrum auctions. This would prevent misuse of the ECB funding route.
The government had allowed ECBs for telecom companies to buy 3G airwaves, which were sold for R1.06 lakh crore as against the budget target of R35,000 crore during 2009-10. The suspense over the success of forthcoming 2G auction is somewhat dampened by the high reserve price of R14,000 crore set for 5 MHz.
Airtel, Vodafone, Videocon and Tata Teleservices are among the telecom biggies that have applied to bid in the auction, but Reliance Industries and Russia?s Sistema surprised by staying away.
