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Mobile operator S Tel may fail to secure a . 953-crore loan from an IDBI-led consortium of eight state-run banks with the telecoms department refusing to sign a tripartite agreement, saying the telco is under probe in the 2G spectrum scam.
The legal wing of the telecoms department advised it against being a party to loans to companies whose mobile permits may be cancelled. The department was asked to wait till the Supreme Court judgment in the 2G case before signing the tripartite agreement. DoT's certification is needed on the loan documents of these companies as the licence is treated as surety.
"Delay in loan disbursal would impact expansion plans," said P Swaminathan, director, S Tel. "The company is now utilising promoters' funds for its capital and other expenses," he said.
Loop Telecom, another firm that acquired telecom licences in the controversial 2G spectrum sale of 2008, was denied funds earlier by an SBI-led consortium on similar grounds. The group of lenders that include Central Bank and Federal Bank had sanctioned a . 6,500-crore loan to the company.
The six companies that were given mobile permits in January 2008 under controversial circumstances by former telecoms minister A Raja could now find their expansion plans in trouble if other lenders also decide to follow the precedent. Communications minister Kapil Sibal had written to prime minister Manmohan Singh, seeking his intervention to get banks lend to the embattled telecom companies.
S Tel, jointly owned by Bahrain Telecommunications Company with 49% stake and the $3 billion Siva Group (formerly Sterling Infotech Group), has permits to provide telecom services in six of the 22 telecom circles in the country. The telco had secured a nine-year loan at an interest rate of 12.75% from the IDBI-led consortium, which included State Bank of India, Canara Bank, Punjab National Bank, Central Bank of India, Union Bank of India, Allahabad Bank and Bank of Baroda. S Tel had earlier announced that the consortium was ready to extend . 1,500 crore, but it was only borrowing . 953 crore in a phased manner over 2-3 years. S Tel CEO Shamik Das said the telecoms department had taken a similar approach regarding loans to all companies and added that the telco would approach the DoT again after the 2G cases are settled.
"The normal procedure has got held up because the matter is sub judice - now the disbursement of the loan will only begin after the 2G case is settled," he said.
S Tel is under probe after national auditor Comptroller and Auditor General of India said that as many as 85 of the 122 licences given to six companies --Uninor, Videocon, Loop Telecom, S Tel, Etisalat and Allianz Infratech - were illegal as these firms did not meet the eligibility criteria.
These six companies had disclosed "incomplete information and submitted fictitious documents and used fraudulent means" for obtaining them, the report had said. Loop Telecom was able to secure only . 1,000 crore against the requirement of . 6,500 crore, an executive aware of the development said. With the DoT refusing to sign the tripartite agreement, the telco has already repaid Rs 500 core to the Central Bank and the remaining . 500 crore will be returned soon, the executive said. A company spokesman declined comment on the development.
Loop recently told the Supreme Court that it was willing to return its mobile permits against a refund of . 1,450 crore. Loop operates in eight circles, but has a negligible subscriber base, except in Mumbai where its subsidiary Loop Mobile has three million customers.
Loan-ly Path to Growth S TEL S Tel got 9-year loan at
12.75% from an IDBI-led consortium
S Tel says banks ready to
give 1,500 crore, but it was only borrowing 953 cr in a phased manner to be used over a period of 2-3 yrs
LOOP Loop's funding requirement of
6500 cr fell though after 2G controversy broke out
Loop secured only 1,000 cr
from SBI-led consortium
Loop has repaid 500 cr and
will pay beck the remaining 50% soon
The legal wing of the telecoms department advised it against being a party to loans to companies whose mobile permits may be cancelled. The department was asked to wait till the Supreme Court judgment in the 2G case before signing the tripartite agreement. DoT's certification is needed on the loan documents of these companies as the licence is treated as surety.
"Delay in loan disbursal would impact expansion plans," said P Swaminathan, director, S Tel. "The company is now utilising promoters' funds for its capital and other expenses," he said.
Loop Telecom, another firm that acquired telecom licences in the controversial 2G spectrum sale of 2008, was denied funds earlier by an SBI-led consortium on similar grounds. The group of lenders that include Central Bank and Federal Bank had sanctioned a . 6,500-crore loan to the company.
The six companies that were given mobile permits in January 2008 under controversial circumstances by former telecoms minister A Raja could now find their expansion plans in trouble if other lenders also decide to follow the precedent. Communications minister Kapil Sibal had written to prime minister Manmohan Singh, seeking his intervention to get banks lend to the embattled telecom companies.
S Tel, jointly owned by Bahrain Telecommunications Company with 49% stake and the $3 billion Siva Group (formerly Sterling Infotech Group), has permits to provide telecom services in six of the 22 telecom circles in the country. The telco had secured a nine-year loan at an interest rate of 12.75% from the IDBI-led consortium, which included State Bank of India, Canara Bank, Punjab National Bank, Central Bank of India, Union Bank of India, Allahabad Bank and Bank of Baroda. S Tel had earlier announced that the consortium was ready to extend . 1,500 crore, but it was only borrowing . 953 crore in a phased manner over 2-3 years. S Tel CEO Shamik Das said the telecoms department had taken a similar approach regarding loans to all companies and added that the telco would approach the DoT again after the 2G cases are settled.
"The normal procedure has got held up because the matter is sub judice - now the disbursement of the loan will only begin after the 2G case is settled," he said.
S Tel is under probe after national auditor Comptroller and Auditor General of India said that as many as 85 of the 122 licences given to six companies --Uninor, Videocon, Loop Telecom, S Tel, Etisalat and Allianz Infratech - were illegal as these firms did not meet the eligibility criteria.
These six companies had disclosed "incomplete information and submitted fictitious documents and used fraudulent means" for obtaining them, the report had said. Loop Telecom was able to secure only . 1,000 crore against the requirement of . 6,500 crore, an executive aware of the development said. With the DoT refusing to sign the tripartite agreement, the telco has already repaid Rs 500 core to the Central Bank and the remaining . 500 crore will be returned soon, the executive said. A company spokesman declined comment on the development.
Loop recently told the Supreme Court that it was willing to return its mobile permits against a refund of . 1,450 crore. Loop operates in eight circles, but has a negligible subscriber base, except in Mumbai where its subsidiary Loop Mobile has three million customers.
Loan-ly Path to Growth S TEL S Tel got 9-year loan at
12.75% from an IDBI-led consortium
S Tel says banks ready to
give 1,500 crore, but it was only borrowing 953 cr in a phased manner to be used over a period of 2-3 yrs
LOOP Loop's funding requirement of
6500 cr fell though after 2G controversy broke out
Loop secured only 1,000 cr
from SBI-led consortium
Loop has repaid 500 cr and
will pay beck the remaining 50% soon
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