Pvt players can refinance 3G debt through ECBs

With the guidelines detailing the use of the funds now decided, it is certain that the government will come out with the crucial legal document notice inviting applications for 3G auctions later this week. This will ensure that the auctions are completed by March 31. Currently the NIA has been sent by the department of telecommunications to the law ministry for legal vetting.

?Given the short time, some private operators have already arranged lines of credit with domestic funds, but they would certainly like to substitute it by foreign debt, since it might turn out to be cheaper, so the government has issued this clarification?, an official explained.

A finance ministry statement said, ?ECB norms have been relaxed considering the short window available between the date of application for the 3G auction and the date of payment by successful bidders. Earlier, 3G spectrum auctions were supposed to start from February 12, but with the delay in the vacation of spectrum by the defence ministry, the timeline has to be extended.

The statement also detailed the payment plan by the operators after the completion of the auction. ?Current norms demand that the successful bidders of 3G auctions pay 25% of the bid amount within five days of the close of the auction, and the balance amount within 15 days of the auction closure. It has now been decided that the fee for spectrum allocation may be met out of rupee resources by successful bidders, to be refinanced with a long-term ECB,? the statement said. It said that ECBs will have to be raised within 12 months from the date of payment of the final installment to the government and domestic banks will not be permitted to provide any guarantee. The Centre has budgeted Rs 35,000 from the 3G spectrum auctions to bridge its widening fiscal deficit.