Telcos seek cut in bank guarantees

Mobile operators, including Videocon, Etisalat, Aircel and Idea Cellular, have approached the Telecom Ministry seeking a reduction in their financial bank guarantees in accordance with the licence agreement.

The Department of Telecommunications (DoT) has received a few representations from some of the service providers for reduction of the financial bank guarantee in accordance with the clause relating to roll-out obligations, sources in the know said.

The telecom tribunal had recently stated that as far as the financial bank guarantees are concerned, these should be reviewed periodically.

The dues are scrutinised by way of financial bank guarantees and their reviews. The matter may be referred to the access services branch for taking necessary steps to sufficiently secrutnise the roll-out obligations, they said.

In the wake of the 2G scam, funding became difficult for the telecom sector as a whole. Further, an intense competition and huge investments in 3G spectrum have been badly hurting the financials of telecom players.

Periodic review of financial bank guarantees could bring some respite to the players who had submitted these securities at the time of getting licences and spectrum and the DoT is supposed to return as and when the operators meet roll-out schedule.

The DoT has also sought legal opinion from its legal advisor regarding this matter.

Some of the players have also approached TDSAT seeking a direction to the DoT for release of bank guarantees.