Mumbai, Dec 30 The government’s decision to waive bank guarantees for the telecom industry has come as a major relief and will help to boost 4G and 5G investments in India, according to telecom major Vodafone Idea.
Debt-ridden Vodafone Idea (Vi) stated in a regulatory filing that it has received a letter regarding the waiver of bank guarantee from the Department of Telecommunications (DoT). The move comes as a big relief to the debt-ridden telco.
“The waiver is a clear indication of the government’s continued support to the telecom industry. It will ensure that the exposure of the banking system is utilised by telecom operators towards further proliferation of 4G and 5G networks in India," Vodafone Idea said in a statement.
The Department of Telecom (DoT), in a communication dated December 27, 2024, has dispensed with the requirement of submission of Financial Bank Guarantees for the spectrum acquired in auction held in 2012, 2014, 2015, 2016 and 2021, subject to certain terms and conditions.
Prior to this reform, bank guarantees aggregating to about Rs 24,800 crore were required to be provided by Vi against each spectrum instalment, 13 months prior to the instalment falling due for the above auctions, the company said in a BSE filing.
Other major players such as Bharti Airtel are also expected to gain from the decision. No bank guarantees will be required to be provided by the operator for the 2012, 2014, 2016 and 2021 auctions, Vodafone Idea said in a statement.
However, there would be a one-time partial shortfall only for the 2015 auction, where the net present value of all payments made would be less than the pro-rated value of the spectrum used, it said. "We are in discussion with the DoT to determine the final amount of this partial shortfall for the 2015 auction," Vodafone Idea said.
The moratorium for spectrum auction dues for Vi is ending in October next year and bank guarantees were to be submitted 13 months before the next due payment.
Vi was expected to submit bank guarantees in tranches for different spectrum auctions pre-2022. However, the company did not submit any of the tranches scheduled for September and in the ongoing month.
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