Kolkata: Reliance Jio<\/a>, Bharti Airtel<\/a> and Vodafone Idea<\/a> (Vi) have asked the sector regulator to abolish bank guarantees<\/a> (BGs) of all shades to free up more working capital for the upcoming expansion of mobile broadband networks.
In their submissions to the Telecom Regulatory Authority of India<\/a> (Trai<\/a>) on a paper around rationalisation of BGs and service entry fees, the telcos have said BGs not only impose costs on operators but end up as a coercive tool that the Controllers of Communication Accounts (CCAs) in government use to settle apparent breach of contract conditions.
Carriers also don’t see a case for merging performance and financial BGs, calling them an inefficient and costly mode of securitising government dues.
Separately, India’s top telcos, have also urged Trai<\/a> not to cut telecom entry fees to discourage non-serious players and ensure healthy competition.
In its discussion paper, issued late July, Trai had sought views on whether BGs should exist, if performance and financial guarantees needed to be merged for all telecom permits and whether entry fees for telecom licences needed to be cut further.
“BGs in various licences\/authorisations should be discontinued as these don’t serve any purpose in securing government revenues,” Reliance<\/a> Jio said in its submission to the regulator.
It added that BGs end up imposing costs on telcos and CCAs use them to settle demands without even giving an opportunity to the telecom service providers to dispute them, making these a coercive governance tool instead of being financial assurances.
Airtel<\/a> said BGs should be eliminated as they result in blocking off huge funds towards securitisation of government dues that is more towards compliances, creating additional burden on operators and limiting the expansion and growth of mobile networks and services.
“The Cabinet reforms of last year (read: September 2021) have already recognised this and reduced the BGs requirement, which allowed TSPs to prepone the future liability of deferred payments, and some even prepaid their deferred spectrum liability,” Airtel<\/a> said in its submission to Trai.
Under the telecom reforms announced last September, the government cut the BGs requirement by 80% against statutory dues such as licence fees. It also scrapped the need for BGs to secure spectrum payments in future auctions.
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