Bharti chairman and managing director Sunil Mittal said that his company was making the payment under protest. "We fail to understand MTNL's intentions, especially as we had offered to make the payment through a bank guarantee last month," he said.

Mittal added that MTNL had failed to provide the draft of the bank guarantee despite two missives on the matter. "I am surprised that the telecom PSU is adopting this course of action even as we continue to pay crores on account of interconnect charges," he said.

Repeated attempts to contact MTNL CMD S Rajagopalan for his comments proved futile. Company officials denied any knowledge of the matter and said that it was being handled at the "top-most" level.

The second cellular operator in Delhi, Essar Telecom, said that they had already fulfilled the demand of MTNL. "We have already arrived at an agreement with MTNL and have sent four installments," said an Essar spokesperson.

The two Mumbai cellphone operators, BPL and Hutchison Max, said that the Cellular Operators Association of India (COAI) would give a formal response on the matter. "The COAI is holding a formal meeting and will comment on the issue after examining it in detail," said a BPL spokesperson.

Sources added that the entire matter was pending for the last six months and more. "The real issue is that four years after private cellular companies started operations in the country, the Department of Telecom is yet to sign a single interconnect agreement with private operators," sources added.

As a result, interconnection between private cellular networks and landline network of DoT and MTNL has been mired in avoidable controversy.

Given the Comptroller and Auditor General (CAGs) objections to private operators not furnishing the required security deposit, MTNL's moves to make Bharti, BPL, Hutchison and Essar pay up are understandable.

However, the likelihood of any dramatic action by MTNL towards withdrawing the interconnect facility to private cellular operators in Delhi and Mumbai appears to be a remote possibility.

Talks of disconnection threaten to dampen the expected revival of the telecom sector and also reverse the thaw in relations between the private sector and government. The issue can perhaps be best understood by the "letter war" between private cellular operators and MTNL over the issue of security deposit equal to one months interconnect charge.

While private operators have been saying that MTNL is resorting to arm-twisting, Nigam officials say that their hand has been forced by the CAG objection.