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The Department of Telecommunication has returned bank guarantees worth ₹23,000 crore to Vodafone Idea and Bharti Airtel. The move comes as a major relief to debt-laden Vodafone Idea which will get ₹15,000 crore back.
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However, TSPs oppose making the procurement of indigenous equipment mandatoryOn Thursday, the DoT submitted an affidavit to the Supreme Court, stating that they have returned bank guarantees to Voda Idea and Bharti Airtel. Instead, the operators have been asked to refurnish bank guarantees of an amount equal to their next payable installment 13 months before its due date. However, given that the telecom reforms package has also slashed the bank guarantees requirement from 80 per cent to 20 per cent of statutory dues demanded, the burden of bank guarantees will also be low in the future.
The bank guarantees returned to the telcos are for the annual spectrum installment payments deferred by the telcos for the spectrum auctions held in 2012, 2014, 2015 and 2016.
Boost for telcos
This will be a major boost from a fundraising perspective for the telcos. Voda Idea had been urging the government to release its bank guarantees, especially as external investors seek clarity on the same before considering investing. Voda Idea will be able to raise enough cash to invest in its 4G network, and potentially for future 5G investments as well.
The DoT has previously withheld these bank guarantees under the directive of the Supreme Court in their AGR judgment.
The telecom relief package was announced in September 2021, allowing telcos to defer their spectrum and AGR dues for four years. Both Vodafone Idea and Airtel opted for the four-year moratorium on AGR and Spectrum dues. Reliance Jio refused the four-year moratorium on their spectrum and AGR payments and cleared all of their spectrum dues by January 2022.
This comes even as the TRAI recommendations on the 5G spectrum is expected to come latest by Monday. The monetary relief will allow the operators to shore up funds to buy spectrum during the auctions later this year.
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