India relaxes borrowing rules for mobile auction winners
MUMBAI Nov 26 (Reuters) - India's central bank has relaxed overseas borrowing rules for successful bidders in the country's cellphone airwaves auction, making it easier for them to raise money to pay the cash-strapped government.
The Reserve Bank of India (RBI) said on Monday the winning bidders could use short-term foreign currency loans as bridge finance, without seeking approval from regulators.
The companies can then replace these short-term borrowings with long-term external (or overseas) commercial borrowings (ECB), provided the ECB is raised within a period of 18 months from the drawdown of the bridge finance, it added.
The mobile operators will also be able borrow from their parent companies without any limit, provided the parent owns a minimum 25 percent equity in the local company, the RBI added.
The central bank said successful bidders making upfront payments for spectrum via rupee loans would be able to refinance those loans with a long-term ECBs, also without seeking regulatory approval.
Five companies - a unit of Norwegian telecommunications carrier Telenor, Vodafone Group Plc's Indian unit, Idea Cellular, Videocon Telecommunications and Bharti Airtel Ltd - bought airwaves worth a total 94 billion rupees ($1.7 billion) in an auction earlier this month.
The auction raised less money than the government hoped, and officials have since said it will struggle to meet its deficit target for 2012-13.
The companies are required to pay by Dec. 1, although they can pay in installments.
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