A meeting of the chiefs of three financial institutions(Fls) - IDBI, ICICI and IFCI - will today discuss the financing of telecom sector in the wake of thenew revenue sharing arrangement approved by the government.
The meeting being held in Mumbai assumes significance as an urgent funding support by FIs would prove to be crucial if existing telecom operators are to successfully migrate to the New Telecom Policy (NTP) by August 1, 1999. The migration package approved by the government requires existing operators to make an upfront payment of 15 per cent of their licence fee arrears till July 31, 1999, besides furnishing bank guarantees for the remaining amount.
According to FI sources, the three CMDs - GP Gupta (IDBI), KV Kamath (ICICI) and PV Narasimhm (IFCI) - will attempt to evolve a combined strategy towards funding of the sector under the new paradigm, besides discussing the inherent problems threadbare. They would also discuss the possibility of further funding the telecom projects where they have already have exposure. These are Bharti Telenet, BPL Cellular, Srinivas Cellcom and Fascel.
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The Fls would have to take a quick decision one way or the other as the operators deadline of migration to the new policy (August 1) and of making upfront payments (August 15) are. not very far away, sources added.
"The migration package. for existing telecom operators approved by the Union cabinet still leaves a lot of unanswered questions, which we are trying to get clarified," a senior FI official said. "But the FIs would have to anyway take a decision to take the plunge or not before the payment deadline, because otherwise the entire transition process to the new policy could be thwarted."
In a meeting with the DoT officials on June 24 before the cabinet approved the bail-out package, the Fls had opined that the integrated transition package would be very helpful towards reaching financial closure in majority of the existing licensees.
FIs had said that they would like to consider the 15 per cent up front payment as promoter's contribution to the project while considering financial closure.
Fls had stated that it would be difficult for them to consider enhancement of bank guarantees till the financial closure is in sight. Hence, they asked for a period of four months to be given to the licensees to arrange full securitisation of outstanding dues.