Bank guarantee waiver for telecom operators comes with conditions

Additional 3 months' instalment along with annual payments to be paid

Even as the Union Cabinet has agreed in principle to waiving off bank guarantee requirements for deferred spectrum payments by telecom operators, it will be subject to stringent conditions, government sources said on Tuesday. The waiver will be accompanied with a condition that telcos pay an additional three months’ instalment alongside their annual payments.

 

The latest move will see the government giving up the right to claim upfront total bank guarantees amounting to Rs 30,000 crore, sources confirmed. On Monday, the Cabinet decided to waive the requirement for spectrum acquired by telcos in the six spectrum auctions held between 2012 and 2022. Spectrum auction rules of 2022 and 2024 had already removed the requirement. Airtel and Jio were set to submit guarantees worth Rs 2,300 crore and Rs 4,000 crore, respectively. 

 

 

The moratorium on spectrum auction dues for Vodafone Idea (Vi) is set to end in October 2025. According to current rules, the company was supposed to submit bank guarantees 13 months ahead of the next payment due date.  

The Department of Telecommunications (DoT)  asked Vi to submit bank guarantees as an assurance for the spectrum payment of Rs 24,747 crore due in September 2025. The DoT also reached out to the finance ministry for giving exemption to telcos from submitting bank guarantees for spectrum payment dues. 

The waiver is expected to help Vi. Shares of the telco rose 7.8 per cent in intraday trade to Rs 7.53 on Tuesday. Meanwhile, shares of Airtel closed 0.1 per cent lower at Rs 1,577 after initially rising in opening trade. 

Reports had pointed out that Vi had missed paying its second bank guarantees of about Rs 350 crore to cover for spectrum bought in a 2012 auction. This payment was due on November 1. 

 

This came two months after Vi missed the payment of more than Rs 4,600 crore worth of guarantees for the 2016 auction.

The Cellular Operators Association of India (COAI), which represents private sector telecom operators Reliance Jio, Bharti AIrtel, and Vi, welcomed the move. “This landmark decision will significantly help reduce the financial burden on telecom operators in the country,” SP Kochhar, director general of COAI, said in a statement.