In a relief to telecom service providers, the Telecom Regulatory Authority of India (TRAI), on Tuesday, has decided to reduce the entry fee for telecom circle/ metro area to ₹50 lakh from ₹1 crore earlier in case of access service.
For J&K and North-East, the entry fee should be reduced from ₹50 lakh to ₹25 lakh, it said in the recommendations on ‘Rationalisation of Entry Fee and Bank Guarantees.’
Entry Fee is a fixed one-time amount that prospective entrants must pay to enter a market. Entry Fees are typically non-refundable and constitute start-up costs for a firm. A Bank Guarantee is a type of financial instrument to safeguard the interests of the government, as it ensures that the licensee pays its dues on time and fulfills their obligations according to the terms and conditions prescribed in the license agreement.
The Department of Telecom (DoT) had written to TRAI in 2022 seeking rationalisation of Entry Fees and Bank Guarantees of the various licences operating in the telecom sector on the request of telcos such as Airtel, Reliance Jio and Vodafone Idea.
“In an environment of rapid technological transformation in the telecommunications sector, in order to facilitate the orderly growth of the telecom sector and ease of doing business, TRAI has made recommendations to the government for reducing the entry fees across various license authorisations and the merging of bank guarantees,” said the regulator.
It is expected that reductions in entry fee will lead to the entry of new service providers in the market, increase investment and enhance competition in telecom sector, said TRAI in the recommendations.
“The merging of bank guarantees will encourage ease of doing business and enable licensees to make investments in the sector thereby ushering the growth in the sector. Both these measures will improve the quality of service and enhance consumer welfare,” it added.
Some of the other salient features of the recommendations include national long distance service (NLD) and international long distance service (ILD) from ₹2.5 crore to ₹50 lakh.
It further recommended that for unified licence, financial bank guarantee (FBG) and performance bank guarantee (PBG) should be merged into a single bank guarantee for securitising the dues, to cover the violation of licence conditions and to ensure the performance under licence agreement.