Government's Waiver of Bank Guarantees for Telecoms to Enhance 4G and 5G Networks: Vodafone Idea
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Mumbai, Dec 30 (NationPress) The government's recent move to eliminate bank guarantees for the telecommunications sector has provided substantial relief and is expected to enhance investments in 4G and 5G infrastructure across India, as stated by the telecom giant Vodafone Idea.
In a regulatory filing, the financially strained Vodafone Idea (Vi) announced that it had received a notification regarding the bank guarantee waiver from the Department of Telecommunications (DoT). This decision offers significant respite to the company burdened with debt.
According to Vodafone Idea, “The waiver represents a strong endorsement of the government's ongoing support for the telecom sector. It will enable telecom operators to leverage banking resources to further expand 4G and 5G networks in India.”
As per the Department of Telecommunications (DoT), in a communication dated December 27, 2024, the requirement for submitting Financial Bank Guarantees for the spectrum acquired in auctions conducted in 2012, 2014, 2015, 2016, and 2021 has been lifted, subject to specific terms.
Previously, bank guarantees totaling around Rs 24,800 crore were mandated for Vi for each spectrum installment, to be provided 13 months prior to the due date for the aforementioned auctions, as noted in a BSE filing.
Other leading operators, including Bharti Airtel, are also anticipated to benefit from this decision. No bank guarantees will be required for the auctions held in 2012, 2014, 2016, and 2021, according to Vodafone Idea's statement.
Nonetheless, there will be a one-time partial shortfall for the 2015 auction, where the net present value of all payments made is less than the pro-rated value of the utilized spectrum. Vodafone Idea remarked, “We are currently in talks with the DoT to define the final amount of this partial shortfall for the 2015 auction.”
The moratorium on spectrum auction dues for Vi is set to conclude in October next year, and bank guarantees were slated to be submitted 13 months before the next payment is due.
Vi was expected to submit bank guarantees in phases for various spectrum auctions prior to 2022. However, the company failed to submit any of the scheduled tranches for September and the current month.
