Cell firms' debt may be recast for unified licence

 The Telecom Regulatory Authority of India (Trai) has suggested a financial restructuring package for the telecom industry, similar to the ones worked out for the steel and the textile sectors.

 Trai Chairman Pradeep Baijal outlined his proposal on October 12 during a meeting of the group of ministers looking at unified licensing for the telecom sector.

 Baijal, who was a special invitee at the meeting, said there was no reason why the government should compensate cellular service providers if a unified telecom licence was introduced.

 Nevertheless, the operators are in a tough position financially and the government may have to consider a relief package.

 As part of the restructuring package, the government could extend the maturity period of loans or reduce the interest rates on rupee debts.

 For the steel industry, the government had extended loan maturity periods from eight years to 14. At the same time, the interest rate on rupee debt was lowered from 18 per cent to 14 per cent and the companies were allowed to part convert domestic debt to foreign currency debt at lower interest levels. Also, some companies wrote down equity by 40 per cent.

 In a presentation to the ministerial group, the regulator pointed out that the consolidated amount sanctioned to the telecom industry by leading financial institutions was around Rs 8,480 crore. Of this, Rs 4,071 crore has been allocated, while another Rs 2,664 crore is outstanding.

 An internal note circulated to members of the group has pointed out that telecom companies took loans at high rates of interest, in the range of 12-14 per cent, but the rates have now come down dramatically to 7-8 per cent. One suggestion is to bring these costly loans in line with the new interest rates.

 The Cellular Operators