The telecom operators have requested the Telecom Regulatory Authority of India (TRAI) to scrap bank guarantees (BGs) of all types as this would help telcos to free up more working capital for the upcoming expansion of mobile broadband networks. In their submissions to the TRAI on the consultation paper titled ‘Rationalisation of Entry Fee and Bank Guarantees’, the telcos have asserted that BGs impose costs on operators and acts as a coercive tool for the Controllers of Communication Accounts (CCAs) to settle apparent breach of contract conditions.
Separately, in a bid to ensure healthy competition and encourage serious players, the telecom operators have urged TRAI to abstain from trimming down of the telecom entry fees.
According to Reliance Jio, BGs in various licences/authorisations should be discontinued as these the operator believes that these do not serve any purpose in securing government revenues. Similarly, Airtel believes that BGs should be eliminated as they result in blocking off huge funds towards securitisation of government dues that is more towards compliances and thereby creating additional burden on operators and limiting the expansion and growth of mobile networks and services.
At present, BGs are submitted to the Department of Telecommunications (DoT) and in case statutory dues like licence fees and spectrum usage charges (SUCs) are not paid on time, the government has the option of invoking them. Meanwhile, Vodafone Idea Limited (Vi) is of the opinion that while the performance and financial BGs may be merged into a consolidated single BG, the quantum should be reduced by 50 per cent for both the performance bank guarantee (PBG) and financial bank guarantee (FBG) elements as a merged BG would increase the exposure risk for telcos.
