Decision To Encash Bank Guarantees Disastrous For Telecom Industry: COAI

The Cellular Operators’ Association of India (COAI) has warned that any decision to encash bank guarantees will be “disastrous” for the telecom industry, which only has three private players.

“Any move to encash bank guarantees will precipitate an already precarious situation,” COAI Director General, Rajan Mathews told news agency PTI.

Mathews termed the ‘test checks’ being proposed by the telecom department to examine deviation in calculation of adjusted gross revenue (AGR) dues by telecom companies as a “standard audit procedure”. The Department of Telecom (DoT) needs to ensure consistency among its different circles on calculation of dues to minimise any differences, he said.

While amounts need to be finalised as soon as possible, operators should also be given a fair opportunity to explain the deviations in calculation, Mathews said.

“There should be consistency amongst all LSAs (Licensed Service Areas) of the DoT (Department of Telecommunications) on how the amounts are calculated, so the differences are minimised,” Mathews added.

His comment came days after the government said it will conduct ‘test check’ for any one year (of telcos’ dues) to examine variances between telecom companies’ assessment and the government’s own calculation of AGR liabilities.

In wake of deepening crisis in the telecom sector, the government is trying to strike a balance between complying with the Supreme Court order on AGR dues, ensuring health of the sector and safeguarding consumer interest.

As per report, the DoT will start test check with companies which have already claimed they have made full and final settlement towards their statutory liabilities, like Tata Teleservices.

As per DoT estimates, 15 entities owe the government Rs 1.47 lakh crore – Rs 92,642 crore in unpaid licence fee and another Rs 55,054 crore in outstanding spectrum usage charges.

Vodafone Idea, which owes over Rs 53,000 crore in dues, has made a total payment of Rs 3,500 crore. While Bharti Airtel has paid 10,000 crore, Tata Teleservices has made a payment of Rs 2,197 crore.―Business Today