DoT serves notices on operators

NEW DELHI, DEC 5: Even as the PM's recently constituted Group on Telecom (GoT) is trying to evolve a package to sort out the current imbr...

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NEW DELHI, DEC 5: Even as the PM’s recently constituted Group on Telecom (GoT) is trying to evolve a package to sort out the current imbroglio between the Government and the private telecom operators over non-payment of licence fees, the Department of Telecommunications (DoT) has served notices to several companies in the past week to cough up bank guarantees. This has virtually stirred a hornet’s nest as private operators have approached the PMO to bail them out.

The DoT letter sent to private operators says: “Please extend/enhance bank guarantees” on the date specified separately for each company, or else “this may be viewed as a violation of the existing licence conditions liable for suitable action” against the erring companies.

The DoT’s logic behind sending these notices is based on the mounting outstandings that the industry currently owes to the department. Cellular operators owe the Government Rs 1,900 crore while basic operators owe the Government Rs 900 crore. Officials in the DoT say thatwhile they have directions from the PMO to not encash bank guarantees till December-end by when the GoT is expected to have a solutions package in place, they have to inform companies to at least extend their bank guarantees (BGs) to keep their licences valid. Companies on the other hand have been saying that while all deadlines are made to apply on them, there is still no clarity on when the Government will have its package ready. Says a senior executive of a leading cellular company, “When the Government has already announced its decision to resolve the issues of pending licence fee payments, banks and financial institutions are not ready to productive purposes such as extension of BGs.” He further says, “Even if they are, there is a 7 to 10 per cent difference between the advances made for extending BGs and for other commercial purposes.”

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The operators also say that it was because of the paucity of financial resources that the industry had approached the Government to rethink its policy on theexisting high licence fee structure. Had these funds been available, they would have paid their licence fees anyway, they say.

The DoT officials say that earlier they have been accused of not being hard on private operators as the licence fee receipts are received by the DoT on behalf of the Ministry of Finance as these funds do not accrue to the department. When by the end of December, the outstandings touch the level of Rs 4,800 crore, the Finance Ministry may suddenly press the button for funds for the Budget by February. “At that time we may be held guilty for not having our paper work up-to-date”, said DoT.