3G bidders allowed to pay in rupees

ECB will have to be raised within 12 months from the date of payment of the final instalment.

Telecom operators who wish to bid at the auction of 3G spectrum will be allowed, to their relief, to raise money from the domestic market, which could later be refinanced through debts raised from abroad.

“Given the short window available between the date of application for the auction and the date of payment, the bidders will find it difficult to raise ECB (external commercial borrowings) to meet the payment obligation,” the finance ministry announced today.

The statement said the ministry would amend the ECB policy by allowing companies to pay for 3G spectrum in rupees and raise funds abroad within 12 months.

The department of telecommunications (DoT) is likely to issue the notice inviting applications (NIA) this week and the auction process is expected to start from February 25. The winners would then have to deposit 25 per cent of the bid within five days of the close of the auction and the balance amount within 15 days of the closure.

The government had earlier permitted eligible borrowers in the sector to avail of ECB for the payment. “As the amount involved will be huge and has to be raised within a limited period of time and payable directly to the government, 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, under the approval route,” it said.

The ECB will have to be raised within 12 months from the date of payment of the final instalment to the government. Authorised dealers would monitor the end-use of funds and domestic banks will not be permitted to provide any guarantee.