The Telecom Regulatory Authority of India (TRAI) has suggested a reduction in bank guarantee given by mobile operators, and sought some clarifications on network roll-out conditions for the spectrum auctions slated for February 3.

TRAI has written a letter to the Department of Telecom, asking it to reduce performance bank guarantee (PBG) substantially to Rs.14 crore for each non-metro service area, and Rs.7 crore for Delhi, Mumbai and Kolkata service areas. As per the auction rules, DoT has asked new entrants in any service area to submit Rs.35 crore PBG and existing service providers Rs.21 crore per service area for a minimum period of six years before signing the licence agreement.

According to TRAI, if a telecom operator misses the deadline for rolling out networks, there can be a maximum penalty of Rs.7 crore in the 5-phase roll-out, and beyond the grace period the company’s licence can be cancelled. TRAI said that at any point of time a company can’t be in violation of more than two consecutive phases, for which the maximum possible penalty can be Rs.14 crore.

“TRAI, thus, wants the PBG amount should be Rs.14 crore for each licensed service area except Delhi, Mumbai and Kolkata,” official sources said, citing the letter dated.

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