S Tel may be unable to secure a Rs 9.53 billion loan from an IDBI-led consortium of eight state-run banks, say news reports. This is because the Department of Telecommunications (DoT) has refused to sign a tripartite agreement, as the operator is under probe in the 2G spectrum issue.
The legal wing of the DoT has advised it against being a party to loans to companies whose mobile permits may be cancelled. DoT was asked to wait until the Supreme Court judgment was declared 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.
According to P. Swaminathan, director, S Tel “The delay in loan disbursal would impact expansion plans. The company is now utilising promoters’ funds for its capital and other expenses.?
S Tel, jointly owned by Bahrain Telecommunications Company with 49 per cent 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 operator had secured a nine-year loan at an interest rate of 12.75 per cent from the IDBI-led consortium, which included the 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 would lend it Rs 15 billion, but it was only borrowing Rs 9.53 billion in a phased manner over two or three years.
