Vodafone Idea in talks with DoT to ease bank guarantees for older spectrum
Vodafone Idea has announced that it is currently in talks with the Department of Telecommunications (DoT) to remove bank guarantee requirements for spectrum acquired prior to 2022, according to a report by The Economic Times.
This statement comes after the DoT issued a notice to the company demanding payment of the bank guarantee (BG) as stipulated by regulations, since no decision on a waiver has been reached yet.
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The company, in a filing, said, “We would like to submit that the company has made detailed representations to the DoT and continues to be engaged with DoT for removal of the bank guarantee requirements for spectrum acquired before 2022. This is also an industry question.”
It further said, “As and when a final decision is taken by the DoT, the company will make the necessary disclosures as required by law.”
The DoT is also in discussions with the Ministry of Finance regarding the potential removal of BG requirements. Vodafone Idea (Vi) must submit these bank guarantees, as the moratorium on its spectrum auction dues will end in September 2025, and BGs need to be submitted at least one year in advance to secure these dues. Vi was initially expected to provide bank guarantees in stages for various auctions beginning September 20, the report said.
In total, Vi must present bank guarantees exceeding Rs 24,700 crore to the government in the coming months.
Earlier, Vi requested the DoT to waive the bank guarantee submission. While firms acquiring airwaves in auctions from 2022 onward are not required to provide bank guarantees, earlier regulations mandated that companies submit a BG equivalent to one annual installment, the report said.
In case the DoT opts to eliminate the bank guarantee requirement for past auction dues, both Reliance Jio and Bharti Airtel, alongside Vi, would also reap some benefits. Estimates suggest that Reliance Jio’s annual bank guarantee obligation could reach approximately Rs 4,000 crore, while Airtel’s could be around Rs 3,000 crore, the report mentioned.
To mitigate interest costs, both Airtel and Jio have been prepaying their past spectrum dues. Last month, Airtel made a prepayment of Rs 8,465 crore to the DoT for the 2016 spectrum auction.
First Published: Oct 08 2024 | 1:37 PM IST