The telecoms want the government. discard bank guarantees


Trust India’s big guns to ask the government for every form of rebate they can hope for. After initially fighting for Indian airwaves, the three key players have come together to demand the removal of bank guarantees that the government usually seeks to ensure that the parties involved meet their financial and performance obligations.

Reliance Jio joined struggling Bharti Airtel and Vodafone Idea (VI) in making this argument on the grounds that removing bank guarantees would free up more working capital for the expansion of mobile broadband networks. Of course, without this financial clause, the government could get its thumb sucked if any of the three reneged on their obligations.

The three companies have argued to the Telecommunications Regulatory Authority of India (TRAI) that bank guarantees impose additional costs on operations and also become a coercive tool that government Communications Account Controllers (CCAs) use to settle. breaches of contractual terms. In other words, tails they win, tails they want to win too!!

They further argue that there is no need to merge performance guarantees and financial bank guarantees on the grounds that these are both inefficient and costly modes of securitizing government royalties. As if that weren’t enough, the three companies have gone ahead and pleaded with TRAI to refrain from lowering telecom entry fees to stop what they call “unserious players”.

Are we witnessing the beginnings of a monopoly that the Indian telecoms industry would become? Especially when the third leg of this tripod is weak and could end up being subsumed by the two larger ones over a short period of time.

Of course, the original sin can be attributed to TRAI who asked the views of telecom operators on bank guarantees and whether performance and financial guarantees should be merged for all telecom licenses and whether the time to reduce telecommunications license fees. We are still trying to figure out why TRAI would go this route?

While Reliance Jio was adamant that licenses and permissions should be discontinued as they felt it was pointless. Which is to say that the country’s airwaves belong to them because they paid for it. By the same logic, anyone trying to bottle up Gangajal could claim the whole river!!!

Archrival Airtel asked for the guarantees to be removed, but Vi wanted performance guarantees and financial bank guarantees to be merged, while asking for the amount to be reduced to half of what it is now. Rather funny that the company that could benefit the most from the removal of bank guarantees is the one that pleads for its existence in a reduced avatar!

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