India’s Department of Telecommunications (DoT) is seeking additional financial guarantees from the country’s mobile operators, claiming existing holdings aren’t sufficient to secure the huge outstanding amounts the industry owes the government in licence and spectrum usage fees, The Economic Times (ET) reported.
The DoT petitioned the country’s Supreme Court to approve nearly INR330 billion ($4.5 billion) in guarantees, arguing “even with existing financial guarantees and withholding the performance bank guarantee of the licensee companies, it is not adequate security towards the outstanding assessed annual licence fee and spectrum usage dues”, ET said.
The prospect of higher dues couldn’t come at a worse time for the country’s operators, which are in the middle of a costly price war that narrowed margins and hurt the profitability of the top three players. In addition, all have huge debt burdens. Raising the amount operators need to hold as bank guarantees would add significantly to their financial stress.
ET noted the DoT has taken court action to recover spectrum usage and licence fees from a number of operators, with some INR780 billion stuck in litigation. The Supreme Court is considering the definition of adjusted gross revenue, which the DoT uses to calculate annual usage and licence fees.Subscribe to our daily newsletter Back