Two Letter Of Intent Holders Asked To Extend Guarantees
The department of telecommunications (DoT) has asked two basic telecom companies holding letters of intent (LoIs) to extend their financial and performance guarantees up to April 30. The guarantees were to expire by the end of March.
The companies which are asked to extend their guarantees are Hughes Ispat (the LoI holder for Maharashtra and Karnataka) and Gujarat LoI holder Reliance Telecom. Bharti Telenet will also be asked to extend the guarantees when they expire some time in March.
Telecom sources interpret the DoT move as an indicator that it was tentatively setting end-April as the deadline for signing the licence and interconnect agreements. The telecom pacts are expected to be ready soon.
A senior DoT official said yesterday that the agreements were 85-90 per cent ready and only some clauses remained to be worded rightly. The department has been rewording certain contentious clauses of the agreements which the basic telecom companies have described as deal killers.
Once the agreements are cleared by communications minister Beni Prasad Verma, they are expected to be offered to the companies next week. DoT functionaries expect them, in turn, to accept and sign the pacts within a month. Company sources, however, were worried about some of the clauses despite DoT promises. We will need to study the agreements carefully. The exact wording of some clauses like the one on force majeure is crucial, the CEO of one of the LoI holders said.
Two of the LoI holders Bharti Telenet and Reliance have expressed their willingness to sign the agreements immediately after DoT is ready with them. The Bharti company had written to DoT some weeks back asking for an assurance that the concessions accorded to other basic telecom companies be made applicable to it too.
The department of telecommunications is learnt to have agreed to the request.