The Department of Telecommunications (DoT) wants to ensure that the government’s revenues are safe at all costs. For the same, the telecom department might seek a legal opinion on whether it can secure a Bank Guarantee (BG) against the adjusted gross revenue (AGR) dues that the telcos are liable to pay.
According to an ET Telecom report, an official aware of the matter said that the Supreme Court’s (SC’s) order didn’t mention anything about BGs. Thus if the DoT wants BGs against the AGR dues, it will have to go to SC for permission. It is worth noting that the telcos have to provide BGs against quarterly statutory payments such as Spectrum Usage Charges (SUC) and License Fees (LF).
Telecom Operators Have Refused to Provide BGs Against AGR Dues
The telecom operators have very clearly said that they won’t be providing BGs against their AGR dues to the DoT. In fact, the telcos have said that if DoT was to pressurise them with the BGs, they would take the matter up with the SC.
Vodafone Idea (Vi) had already said in the AGR dues matter hearing last year that it can’t provide any BGs against the AGR dues because of its precarious financial situation. Vi had said that its spectrum resources and licenses are the best form of protection it can offer to the government against the payment of AGR dues.
It is also worth noting that for a BG to come, a bank needs to agree to provide it in the first place. Looking at the current market situation, there’s hardly any bank that would want to do it for the telcos.
Sunil Mittal, Chairman of Bharti Airtel, had earlier said that BGs are ancient now. Mittal had noted that the telcos have been spending and giving the government tens of thousands of crores in spectrum payments without the backing of such instruments. Thus it is strange to see the government still grilling the telcos for providing BGs against the payments to the government.
At present, if any telco misses out on statutory payments for a quarter, the money is automatically recovered from the BG. Further, the BG keeps on replenishing so that the government’s interests are always secured.
