Cash- strapped telecom companies have not tapped even a quarter of the loans sanctioned

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by banks to pay 3G licence fees, preferring to raise cheaper money through commercial papers and external commercial borrowings (ECBs) besides internal accruals.

Out of a sanctioned amount of more than Rs 43,000 crore, companies drew only about Rs 10,000 crore from the seven banks that were contacted by Financial Chronicle.

“Companies preferred to use other sources of funds first before using sanctioned bank loans as they were costlier. Rupee loans were costlier compared with ECBs and short-term funds that they got from the debt market. So a large portion of bank loans were not utilised,” said a senior banker from IDBI Bank.

While Reliance Communications (RCom), Aircel and Tata Teleservices together raised more than Rs 16,000 crore from the debt market in which mutual funds, insurers, some banks and other companies had invested, others like Bharti Airtel tapped external borrowings, small domestic loans and internal accruals. Bankers said there would have been more one-to-one deals for short-term debt.

State Bank of India (SBI), for example, had sanctioned about Rs 17,000 crore to help telecom companies pay 3G licence fees but they drew only Rs 3,000 crore, said a senior SBI official.

Out of the Rs 8500 crore sanctioned by IDBI Bank, telcos used only Rs 1700 crore.

“We had lined up long-term finance for the Zain acquisition, part of which was used for the 3G spectrum fee. We also utilised a small portion of rupee loans and internal accruals,” said a senior official of Bharti Airtel.

Aircel raised about Rs 4,000 crore through commercial papers and the issue was managed by Deutsche Bank. “Banks and companies invested in the paper,” said a banker who invested in the issue.

While most large banks had sanctioned loans of Rs 3,000-4,000 crore, smaller lenders like Corporation Bank had sanctioned Rs 500 crore for telecom companies.

While RCom raised Rs 5,000 crore and Tata Teleservices raised a similar amount for three months, Aircel raised Rs 4,000 crore for one year. Companies that used ECBs were Bharti Airtel, Vodafone and Idea Cellular.

“We will not comment on the sources of our funding,” said an RCom spokesperson.

Government has received Rs 67,719 crore from the sale of 3G licences in 22 circles, where 71 slots were put up for auction.

Nine companies -- Bharti Airtel, RCom, Vodafone Essar, Idea Cellular, Tata Teleservices, Aircel, Etisalat, S Tel and Videocon Telecommunications -- participated in the auction, which ended on May 19. Etisalat and Videocon did not win any circle.

India’s leading telecom operator Bharti Airtel, which won 3G spectrum licences in 13 circles, paid Rs 12,295.5 crore ($2.73 billion), while Vodafone Essar, which won nine circles, paid Rs 11,617 crore, Aircel paid Rs 6,499.5 crore ($1.44 billion) for 13 circles, and RCom paid Rs 8,585 crore ($1.91 billion).