Reliance Jio, Bharti Airtel and Vodafone Idea (Vi) have asked the Telecom Regulatory Authority of India (TRAI) to help out with liquidity issues. The telcos have asked the regulatory body to abolish bank guarantees (BGs) so that they can free up working capital and use it for expanding their mobile networks. As per an ET Telecom report, telcos implied that BGs affect their business in two negative manners. Firstly, it is a cost for them which reduces their cash-in-hand, and secondly, the Controllers of Communication Accounts (CCAs) in the government use the BGs to settle apparent breach of contract conditions.
As per the Indian telcos, the merging of performance and financial BGs doesn't make sense. BGs are nothing but an inefficient and costly way to secure government dues, the telcos believe. In addition, the operators don't want TRAI to remove or cut the telecom entry fees. This would discourage the non-serious players from entering the sector and would also ensure that the current operators' don't face any extra competition from new players.
In September last year, the government announced a relief package for the telecom sector, which addressed their liquidity concerns. The telcos are now in a much better position. Airtel and Vodafone Idea had opted for the relief measures. The government is in the process of announcing more relief measures in the coming future. It would be interesting to see if the regulatory body listens to the private operators. BGs have been a pain point for operators for many years. It freezes thousands of crores worth of capital of the telcos and affects their ability to expand faster with the mobile networks. 5G rollout would require more capital, and the TRAI must keep that in mind while considering things. As for the no removal of telecom entry fees, there's no saying what TRAI's call would be on this.
