Trai proposes over 50% cut in entry fee for licenses, rejects telcos call to scrap BGs
Telecom Regulatory Authority of India has proposed slashing entry fees for various licences by over 50%, a move aimed at promoting entry of new players in the sector. The authority, however, has proposed to continue with the practice of submitting bank guarantees (BG) for various licences, rejecting telcos' calls to scrap them.
All the three private telecom operators wanted the BGs scrapped, so that more working capital could be freed for expansion of mobile broadband networks.
The telcos had highlighted to Trai that BGs should be discontinued as they don’t serve any purpose in securing government revenues but add imposing costs on them.
The regulator, however, felt that it was important to have some sort of a mechanism to guard against the vagaries of the telecom market. “Having bank guarantees has been such a time-tested mechanism,” Trai said in its recommendations on ‘Rationalization of Entry Fee and Bank Guarantees’ released Tuesday.
But the regulator has proposed to merge financial bank guarantee and performance bank guarantee, a move that will reduce the compliance burden of existing firms.
“The merging of bank guarantees will encourage ease of doing business and enable licensees to make investments in the sector thereby ushering the growth in the sector,” Trai said.
When it comes to BGs, Trai took note of the telecom reforms announced in September 2021, wherein the requirement for submitting BGs was reduced by around 80%. Currently, BGs are submitted to the Department of Telecommunications (DoT) and in case the statutory dues like licence fees and spectrum usage charges are not paid on time, the government has the option to encash the BGs to secure payments.
To enhance the ease of doing business, the process for
