The Union Cabinet has reportedly decided to waive the requirement for telecom operators to submit substantial bank guarantees (BGs) for past spectrum purchases.
This move is expected to provide substantial relief to major telecom firms, which together owe more than INR 30,000 crore in BGs to the government.
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Bharti Airtel previously urged the Department of Telecommunications (DoT) to ensure fair treatment for all telecom companies, irrespective of their financial conditions, while backing the waiver of bank guarantees.
The recent decision is expected to provide significant relief to Vodafone Idea (Vi), which owes over INR 20,000 crore to the government. The company has highlighted its financial struggles and is seeking government support to remove the bank guarantee requirement for spectrum payments. Vodafone Idea believes that such a waiver would encourage banks to offer more credit, easing its financial challenges.
In August, the Cellular Operators Association of India (COAI), representing private telecom firms, also appealed to the DoT for the removal of BG requirements for spectrum auctions conducted before 2022.
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Reports indicate that Vodafone Idea is expected to submit bank guarantees (BGs) amounting to around INR 24,600 crore. Reliance Jio’s annual BG requirement from previous auctions is estimated to be INR 4,000 crore, while Airtel's stands at approximately INR 3,000 crore. Both Jio and Airtel have been prepaying installments on past spectrum dues to reduce interest costs.
The relief provided by the Cabinet reportedly applies to bank guarantees for spectrum payments made in auctions conducted in 2012, 2014, 2015, 2016, and 2021.
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