'3G: Raise funds locally, refinance later'

The government on Monday allowed prospective 3G bidders to raise funds from domestic markets, which could later be refinanced through debts raised abroad, giving a major boost for 3G spectrum auction.

A finance ministry statement said external commercial borrowings norms have been relaxed considering the short window available between the date of application for the 3G auction and the date of payment by successful bidders.

However, ECB will have to be raised within 12 months from the date of payment of the final installment to the government and domestic banks will not be permitted to provide any guarantee, it said.

The statement further said the current norms demand the successful bidders of 3G auction pay 25 per cent of the bid amount within five days of the close of the auction and the balance amount within 15 days of the auction closure.

As such '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 longterm ECB,' it said.

Though there are no curbs on telcos raising debts from the domestic markets, the easing of ECB norms would help telcos raise cheaper foreign debts at a later date.

A leading telecom player keen to bid for national 3G licence said the easing of norms is a big help to reschedule the payment.

The government had earlier eased the ECB guidelines allowing telcos to raise funds abroad to participate in 3G auction.

The government has fixed Rs 3,500 crore (Rs 35 billion) as the minimum

price for all-India 3G auction spectrum and hopes to raise Rs 35,000 crore through it.

The auction is likely to take place this fiscal.