Norwegian telecom company Telenor ASA has asked the Indian government for a one-time relaxation in external commercial borrowing (ECB) guidelines. The relaxation is sought to enable the telco to extend a loan in excess of $750 million (about Rs 4,163 crore) to finance the payment for 2G spectrum in the forthcoming auction through its companies, as well as for running its current operations in the country.
The move is significant as Telenor had earlier said it would have to pull out of India and would not participate in the coming 2G spectrum auction in case the high reserve price of Rs 3,622 crore per MHz recommended by the sector regulator was accepted by the government. The company has 67 per cent equity stake in Unitech Wireless (a JV with its estranged partner, the Unitech group) in India and was one of the operators whose pan-India 2G licences were cancelled after a Supreme Court order. The company had announced it would set up a separate company with a new Indian partner to bid for the auction.
In a communication to the finance ministry, Telenor has said it intends to provide shareholder loans and ECBs to the Indian company for an amount of $2 billion (about Rs 11,098 crore) that may be needed to pay for 2G spectrum. The company would also require some funding to carry on its current operations till the quashing of its telecom licence.
Apart from permission to provide ECBs in excess of $750 million in a financial year to its Indian entities, Telenor has asked for waiver of the end-use restriction prescribed under the ECB guidelines on repayment of rupee loans, operational expenditure, working capital requirements and general corporate purposes. It has also asked for permission to prepay the shareholders’ loan with an exemption from seeking RBI approval. The department of economic affairs in the ministry of finance has decided to seek the central bank’s views before examining the proposal.
Tor Odland, vice-president, group communications, Telenor ASA, said, “We face a challenging situation with no Indian banks willing to lend funds to any new operator and having reached single borrower limits with all international banks that have advanced funds to Uninor on our guarantees. We continue to explore all available financing options and have therefore approached the Indian government about the use of ECBs. Our general objective with the ECBs is to bring in capital to fund Uninor’s operations and perhaps also for use in the auctions, should there be a decision to participate. We have not specified any amount to the Indian government.”
