Govt may dangle debt restructuring sop for Cellular firms
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Govt may dangle debt restructuring sop for Cellular firms

Cellular operators may be allowed to restructure their debts as part of a compensation to move towards unified licence regime.

business Updated: Oct 21, 2003 16:33 IST

Cellular operators may get a big financial incentive by way of being allowed to restructure their costly debts as part of a compensation to move towards unified licence regime.

Cellular industry's total debt ranges between Rs 12,000-15,000 crore while the total investment is Rs 25,000 crore, sources said.

According to industry sources, the proposal in this regard may come up for discussion in the forthcoming meeting of Group of Ministers (GoM) on telecom, currently looking into the ways to resolve the mobility turf war between WLL and cellular operators.

Though the cellular industry has been demanding cash compensation in lieu of allowing basic operators to offer WLL mobile services but the demand did not get much favour among the members of the GoM.

Sources said the proposal could be mooted by the Financial Institutions in view of their huge exposure in the cellular industry and on apprehensions of their loans becoming bad debts.

Cellular industry had recently claimed that it was facing massive losses to the tune of over Rs 7,000 crore.

When contacted, Cellular Operators' Association of India (COAI), director-general, T V Ramachandran said, "the cellular industry is running at high losses and part of the losses is due to high financing cost."

"If the interest rates are brought down it could help in reducing our losses," he said and added that he was not aware of any such move.

The exact amount of FIs' exposure to individual cellular operators could not be immediately ascertained.

Sources said that such a move, if materialises, would make the balance sheets of cellular operators look clean and they would allow them to raise fresh debts for further investments in the sector.

The next meeting of the GoM headed by Finance Minister Jaswant Singh is slated to be held on October 30 where members would deliberate on unified licencing as well as steps for restricting WLL mobile services within a local call area known as Short Distance Charging Area (SDCA).

Noted banker Deepak Parekh has already made a series of presentation entailing the steps to be taken during the transition to move towards unified regime and has also suggested ways to compensate the cellular operators by way of reducing revenue share among other things.

First Published: Oct 21, 2003 16:11 IST