Continuing its efforts to stem losses in the telecom sector, the government has reportedly proposed establishing the Telecom Finance Corporation (TFC).
The TFC will reportedly examine the financing requirements of the telecom sector, pertaining mainly to spectrum, network roll-out and manufacturing of telecom equipment.
The TFC will function as a non-banking financial and non-deposit infrastructure finance company under the administrative control of the Department of Telecommunications (DoT). It will reportedly be established on similar lines as the Power Finance Corporation and Tourism Finance Corporation of India.
It is believed that the union cabinet has already approved of setting up the TFC, as part of the National Telecom Policy, 2012.
Further, as per news reports, DoT has recommended that TFC?s authorised capital stand at Rs 100 billion. Also, the proposed body would be funded through rupee denominated bonds. Other sources of funds would include term loans from banks, off-shore borrowings from multilateral agencies such as the Asian Development Bank, International Monetary Fund, Worlds Bank and other sovereign funds.
As per government estimates, the telecom sector?s total debt under the twelfth plan (2012-17) will be close to Rs 7.55 trillion. Of this, TFC will initially target 5 per cent, which, as per news reports, will translate into a loan portfolio of Rs 380 billion over five years.
Further, DoT has proposed to establish a 10-member board to govern the corporation. This board will reportedly include a nominee from the finance ministry and three independent directors.
