Big relief for telecom players: Cabinet approves proposal to waive bank guarantees
This decision is expected to offer significant relief to major telecom companies, which collectively owe over ₹30,000 crore in BGs to the government.
- Nov 25, 2024,
- Updated Nov 25, 2024 10:45 PM IST
The Cabinet has approved a proposal to waive the bank guarantees (BG) that telecom operators were required to provide for spectrum purchases up to 2022, according to sources.
This decision is expected to offer significant relief to major telecom companies, which collectively owe over Rs 30,000 crore in BGs to the government.
Earlier, Bharti Airtel urged the Department of Telecommunications (DoT) to ensure equal treatment for all telecom companies, regardless of their financial status, while expressing its support for a waiver of bank guarantees.
The latest decision is expected to benefit the embattled telecom player Vodafone Idea, which owes over Rs 20,000 crore to the government.
Vodafone Idea has highlighted its ongoing financial difficulties as it seeks government assistance to eliminate the requirement for bank guarantees (BGs) to secure its spectrum payments. The company believes that such a waiver would enable banks to extend more credit to them, thereby providing some financial relief.
In August, the Cellular Operators Association of India (COAI), representing private telecom companies, also reached out to the DoT, advocating for the elimination of BG requirements for auctions held before 2022.
According to reports, Vodafone Idea is expected to submit BGs totalling approximately Rs 24,600 crore. In comparison, Reliance Jio’s annual BG requirement from previous auctions is estimated at around Rs 4,000 crore, while Airtel’s is about Rs 3,000 crore. Both Jio and Airtel have been prepaying installments on past spectrum dues to minimise interest costs.
The September 2021 telecom reforms provided telcos with a four-year moratorium on spectrum payments and adjusted gross revenue dues.
The Cabinet has approved a proposal to waive the bank guarantees (BG) that telecom operators were required to provide for spectrum purchases up to 2022, according to sources.
This decision is expected to offer significant relief to major telecom companies, which collectively owe over Rs 30,000 crore in BGs to the government.
Earlier, Bharti Airtel urged the Department of Telecommunications (DoT) to ensure equal treatment for all telecom companies, regardless of their financial status, while expressing its support for a waiver of bank guarantees.
The latest decision is expected to benefit the embattled telecom player Vodafone Idea, which owes over Rs 20,000 crore to the government.
Vodafone Idea has highlighted its ongoing financial difficulties as it seeks government assistance to eliminate the requirement for bank guarantees (BGs) to secure its spectrum payments. The company believes that such a waiver would enable banks to extend more credit to them, thereby providing some financial relief.
In August, the Cellular Operators Association of India (COAI), representing private telecom companies, also reached out to the DoT, advocating for the elimination of BG requirements for auctions held before 2022.
According to reports, Vodafone Idea is expected to submit BGs totalling approximately Rs 24,600 crore. In comparison, Reliance Jio’s annual BG requirement from previous auctions is estimated at around Rs 4,000 crore, while Airtel’s is about Rs 3,000 crore. Both Jio and Airtel have been prepaying installments on past spectrum dues to minimise interest costs.
The September 2021 telecom reforms provided telcos with a four-year moratorium on spectrum payments and adjusted gross revenue dues.