Sanctions hit six telecom projects

The problem has been further compounded as the American, Japanese and some European banks have expressed their inability to lend to Indian projects in the wake of these sanctions. Moreover, the cost of funds have increased due to the latest negative outlook rating by Standard amp; Poor8217;s.

The situation, according to these sources, is particularly 8220;alarming8221; for basic phone services because of scale of investments involved. All the six basic phone services providers would have to pay Rs 30,000crore as licence fee to the government over the next 15 years with plans for investment of over Rs 50,000 crore in the infrastructure during this period.

Industry sources said that the project costs have been further increased due to unexpected 8220;slapping of additional licence fees8221; by the Ministry of Surface Transport.

To add to their woes, the second installment of licence fee by the service providers is due to the government, amounting to about Rs 900 crore. 8220;It is more of an additional burden as there is no revenue as yet,8221; the sources said.

Financial institution sources feel that a moratorium on the payment of licence fee could be one major relief the government could offer to help these six operators.

The operators are Reliance Telecom limited Gujarat circle, Bharati Telenet Madhya Pradesh, Hughes Ispat Maharashtra, Essar Telecom Punjab, Tata Teleservices Andhra Pradesh and Shyam Telecom Limited Rajasthan.