Govt may allow telcos to use spectrum as collateral for bank loans

DoT has suggested that there should be a single TPA for licence as well as spectrum allocated under the unified licencing regime

The Department of Telecommunications (DoT) is likely to allow telecom operators to use spectrum as collateral to secure loans from banks.

In a recent discussion, the DoT proposed to modify the tripartite agreements telecom companies signed with the government and lenders. Provisions of the existing agreement were framed in 1998. Since then, the sector has seen many changes. Also, licensing norms have been modified, with spectrum being delinked from licences, under the unified licensing regime.

The DoT has said two separate tripartite agreements aren’t feasible, adding the finance and law ministries should consider bringing spectrum under one such agreement. It said a tripartite agreement was necessary to finance telecom projects, as funds came through equity or loans.

Earlier, the DoT had said spectrum couldn’t be used as collateral to secure loans from banks as airwaves were the property of the state.

In the telecom spectrum auction in February, operators had to shell out about Rs 18,000 crore for spectrum. For financing telecom projects, banks sought spectrum as collateral, as they had burnt their fingers during the 2008 auction, which was quashed by the Supreme Court in 2012. This followed the Comptroller and Auditor General saying the government had allocated the spectrum at throwaway prices, resulting in a presumptive revenue loss of Rs 1.76 lakh crore to the exchequer. The cancellation of licences forced a few firms to shut shops, while others scaled down operations.

Together, Indian banks have an exposure of about Rs 20,000 crore to telecom companies in the country. The government has said it will hold the next round of spectrum auction across bands in February next year.