Airtel, Vi Getting Back BGs Worth Rs 20000 Crore from DoT

One of the major issues for the telcos and the telecom sector of India has been maintaining liquidity. In light of this, DoT had announced that it would be cutting down BGs by up to 80%.

Highlights

  • Bharti Airtel and Vodafone Idea (Vi) are getting bank guarantees (BGs) from the government.
  • One of the major issues for the telcos and the telecom sector of India has been maintaining liquidity.
  • The government is already working on the second set of reforms for the telecom sector.

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Airtel Vi

Bharti Airtel and Vodafone Idea (Vi) are getting bank guarantees (BGs) from the government. The Department of Telecommunications (DoT) has decided to return the BGs worth Rs 20,000 crore to Airtel and Vi, reports CNBCTV18. According to the publication’s report, Bharti Airtel is set to receive Rs 8,000 crore and Vodafone Idea to receive Rs 12,000 crore back from the DoT.

So far, DoT has already returned Rs 3,500 crore to Bharti Airtel. Both the telcos should get the complete amount back by the end of December 31, 2021.

DoT Helping the Telcos and the Sector

One of the major issues for the telcos and the telecom sector of India has been maintaining liquidity. In light of this, DoT had announced that it would be cutting down BGs by up to 80%. After the new rule from DoT has been implemented, the telcos have to provide Rs 44 crore to the government as a performance bank guarantee for each service for the license. In comparison to this, the operators had to pay Rs 220 crore for each service for the license with the old rules.

In the same manner, the financial bank guarantee has also been reduced significantly. Now, for each circle, the telcos have to provide a financial bank guarantee of Rs 8 crore against the Rs 44 crore earlier.

This would help the telecom sector in general but would make Vodafone Idea very happy. Vi is the one operator who has benefitted the most out of the relief measures announced by the government in the last few months.

The government is already working on the second set of reforms for the telecom sector. This will go a long way in reviving the sector to its full potential. Even the recently announced prepaid tariff hikes will allow the telcos to generate more revenues which will help significantly with the cash flow.

At the time of writing, Vodafone Idea’s stock is already up 2.73% and is trading at 13.15.

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