Department of Telecom

Licensing Finance Branch

1-6/2004/FBG/dated 16.2.2004

 

Two

All CCA's

Department of Telecom

 

Sub: Maintenance of Financial Bank Guarantee

 

Presently the FBGs for various Basic/UASL and cellular operators (except MTNL) are being maintained by the CCA's.  The following decisions have been taken with respect to maintenance of FBGs.

 

1.         Review -- review of FBGs from now onwards shall be carried out on a quarterly basis to decide on the appropriate quantum of Financial Bank Guarantee.

2.         Encashment of FBG -- The FBG can be encashed by the CCA's, under intimation to DOT HQ in case, in the following cases.

a.  FBGs are not renewed in time (as already specified -- one

     month in advance before expiry)

b. Operators have not submitted an FBG for an appropriate amount  

    as directed by CCA's.

 

3.         Additional Bank Guarantee -- In some cases it is found that there is a substantial jump in the license fee, requiring a revision in the FBG amount. It is now decided that fresh BG or additional BG shall be asked from the operators, in case there is a 25% jump in the quarterly license fee.

 

4.         The revised percentage rates of revenue share to be collected from Basic and cellular Service operators have already been conveyed vide endorsement no. 17-11/2002-LF dated 29/1/2004.  The same is enclosed for ready reference.  The new rates are applicable from 01.04.2004 and revenue shares at these rates will be due for payment by 15.7.2004.

 

In view of this reduction it has been decided that the operators, can be permitted to offer revised FBG for a proportionately lower amount, only after 15.4.2004, provided the 4^th quarter (03-04) revenue share has been paid.

 

For example if the present highest quarter License Fee is Rs 5 Cr the existing FBG is for an amount of Rs 11 crores.  With effect from 15.4.2004 the FBG will be for an amount of 8.8 crores, in case the rate has come down from 10% to 8% (i.e. Category B circle).

 

In addition to this reduction, for the first two circle cellular operators (licences awarded before 1999), there is an additional relief of 2%.  (Copy of relevant orders enclosed).  The FBG amounts in their cases will governed accordingly.

 

This revision in FBG will be allowed even if the Bank Guarantees are due for expiry at a later date.  In any case the review will be again due in the next quarter.

 

5.         Reduction in FBG of BSOs was on account of migration to UASL -- After migration all BSOs have to follow the same set of financial conditions including FBGs, as in the 4^th cellular license agreements (licenses awarded in the 2001).  Therefore, the migrating BSOs have to submit FBGs in line with what is submitted by the 4^th cellular licensees.

 

The above is for necessary action at your-end.  Please feel free to interact for any further clarification.

 

Encl: 3 as above

 

 

-S/d -

(Surajit Mandol)

Director LF II

Tel 23036266, 23036257

e-mail: smandol@bsnl.in