Govt's nod for bank guarantee waiver will reduce telcos' burden: COAI

Industry body COAI on Tuesday said the Cabinet nod for bank guarantee waiver for past spectrum purchases is a "landmark decision" that would help reduce financial burden on telecom operators in the country.

The association - whose members include Vodafone Idea, Bharti Airtel and Reliance Jio - further said the move will enhance cash flow, free up capital and enable capital investments in network expansion and technology upgrades. This, COAI said, will ensure a stronger and robust rollout of telecom networks in the future.

"COAI welcomes the Union Cabinet's move and thanks the Government on approving the waiving of bank guarantee for telecom operators on spectrum purchased before 2022. This landmark decision will significantly help reduce the financial burden on the telecom operators in the country," SP Kochhar, Director General of COAI said in a statement.

The Union Cabinet has waived the requirement to submit bank guarantees for spectrum purchased through auctions held before 2022 - a move that offers a breather to debt-ridden Vodafone Idea as it already crossed the timeline to submit Rs 24,746.9 crore bank guarantee for spectrum payment coming up between October 2025 and September 2026.

The decision will also provide relief to Bharti Airtel and Reliance Jio who have bought radiowaves through various auctions that were held before 2022.

"While we are studying the details of the decision and will be able to have a more substantial view of the same, we feel positive that this decision will enhance cash flow, free up capital and enable capital investments in network expansion and technology upgrades, ensuring a stronger and robust rollout of telecom networks in the future," COAI said.

Meanwhile, Digital Infrastructure Providers Association (DIPA), in a statement, termed the decision a pivotal moment of financial relief and strategic support for India's telecom sector.

"By removing the bank guarantee requirements retroactively, the government has created a more flexible financial environment that will enable telecom operators to optimise their capital allocation, enhance liquidity, and accelerate infrastructure investments," Manoj Kumar Singh, Director General, DIPA said.

This decision is particularly significant for operators like Vodafone Idea, who have been navigating complex financial challenges, DIPA noted.