Kolkata: Reliance Jio, Bharti Airtel and Vodafone Idea (Vi) have asked the sector regulator to abolish bank guarantees (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 (Trai) 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 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 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 said BGs should be eliminated as they result in blocking off huge funds. Cash-strapped Vi said while the performance and financial BGs may be merged into a single BG, the quantum should be reduced by 50% for both the PBG and FBG elements as a merged BG would increase the exposure risk for telcos.
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