Vodafone Idea said India government’s decision to waive bank guarantees for the telecom industry has brought significant relief, enabling increased investments in 4G and 5G networks.
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Vodafone Idea (Vi), the third largest telecom operator in India, has received okay from the Department of Telecommunications (DoT) regarding the waiver.
Vi’s reported net debt (excluding leases but including interest accrued and not due) increased INR 93 billion QoQ to INR 2.12 trillion on dues repayment to vendors/banks and also spectrum acquisition.
Vi owes ~INR 2.23 trillion to Government of India for deferred spectrum (~INR 1.52 trillion) and AGR dues (INR 703 billion). Bank debt declined to ~INR 33 billion vs INR 46 billion QoQ, INR 79 billion YoY.
The waiver eliminates the need for financial bank guarantees for spectrum acquired in auctions held in 2012, 2014, 2015, 2016, and 2021, subject to specific terms.
Previously, Vi was required to provide bank guarantees totaling approximately Rs 24,800 crore against each spectrum instalment. This reform allows telecom operators to redirect banking system exposure toward expanding 4G and 5G networks.
Bharti Airtel and other telecom players are also expected to benefit. The waiver applies to all eligible auctions except for a one-time partial shortfall related to the 2015 auction, for which Vi is in discussions with the DoT to finalize the amount.
The moratorium on spectrum auction dues for Vi ends in October next year, with earlier requirements to submit guarantees 13 months before payment deadlines no longer applicable.
TelecomLead.com News Desk