To give more funding access to cash-hit telecom firms, with a cumulative debt of R250,000 crore, and to raise rural penetration, the telecom department has finalised the fine print of the proposed Telecom Finance Corporation (TFC).
TFC will have a loan portfolio of R7,000 crore annually. The main source of funds for TFC will be through the issue of taxable and tax-free bonds, term-loans from banks, off-shore borrowings, including from Asian Development Bank, IMF, World Bank and other sovereign funds.
TFC is proposed to be set up as a financial institution, dedicated to meet the funding needs of the telecom sector and promote efficient investments. In a memo prepared for the upcoming meeting of the telecom commission on July 2, the DoT has suggested that TFC will provide line of credit, bridge loans, corporate loans, debt refinancing and other financial/funding solutions for borrowers in the sector.
TFC is proposed to be formed on the lines of Power Finance Corporation, IRFC, REC and other such specialised sector-specific development financing institutions. It will be incorporated under the Companies Act, 1956 as a public financial institution and registered as a non-banking financial company, non-deposit infrastructure finance company (NBFC-ND-IFC).
The National Telecom Policy 2012 stipulates the creation of a telecom finance corporation with the overall purpose of facilitating investments in the sector.
The Planning Commission has included the creation of a TFC as one of the targets for the 12th Five-Year plan.
The Planning Commission projected an outlay of R9,43,899 crore for the telecom sector during the 12th Five-Year Plan to meet the various targets for expansion of telecom services in the country.
The Budget proposals state that Infrastructure Debt Funds will be encouraged. The TFC will cater to debt and other financing requirements of the telecom sector.
TFC shall act as a vehicle for providing financing at competitive rates to telecom infrastructure projects. Besides leading to a greater penetration of telecom services to rural and remote areas of the country, dedicated sources of funding would also encourage and promote R&D and indigenous manufacturing of telecom-related equipment in small and medium scale sectors.
TFC being a sectoral