Communications and Information Technology Minister Kapil Sibal on Monday met Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee and discussed problems being faced by telecom companies in getting finance and loans from banks and other financial institutions.
“Yes, we met in the morning,” Mr. Sibal told journalists when asked about his meeting with Dr. Singh and Mr. Mukherjee. He, however, declined to give any details. Official sources said they discussed the issue of de-freezing of sanctioning of loans to the telecom companies by banks and other financial institutions.
Telecom companies are struggling to get finances from banks to complete their infrastructure projects needed for expansion of recently-launched 3G as well 2G services.
Prevailing uncertainties in the telecom sector following the Supreme Court-ordered CBI probe into the alleged irregularities in the issuance of 2G licences has forced banks to change their stance.
While banks pledged loans to telecom companies for the highly successful 3G spectrum auction, they are not very forthcoming in issuing funds for infrastructure projects now.
Earlier, Mr. Sibal had written to the Prime Minister on the issue, pointing out that swift sanction of loans was needed to ensure growth of the crucial telecom sector. “Many of the operators have borrowed heavily to pay for the 3G auction fees. They are now facing difficulty in raising resources to undertake the very business that formed the basis of valuation of spectrum... this needed to be resolved at the earliest. If not addressed, this may dent the growth of the telecom sector as a whole, which, despite the recent problems, remained an outstanding success story in the country's history,” Mr. Sibal said in his letter.
The banks are reluctant to fund projects of new telecom companies due to the ongoing probe into the 2G licence issue. During the probe, financing of new licences had also come under the scrutiny of various agencies.
The CBI's Bank Securities and Fraud Cell has registered a preliminary inquiry against unknown bank officials to probe the role of certain public sector banks for providing loans to certain companies.
Decision on pricing
Meanwhile, Telecom Secretary R. Chandrasekhar said a final decision on 2G spectrum pricing and holding of radio waves beyond the contracted limit of 6.2 Mhz will be taken within the next three months.
Last month, the Telecom Regulatory Authority of India had recommended an over six-fold increase in the spectrum price to Rs.10, 972.45 crore for a pan-India license with 6.2 Mhz spectrum against Rs.1,658 crore now.