Airtel, Vodafone Idea Might Get Rs 23000 Crore from DoT

If the Cabinet note is favoured, it will be of big help to the struggling Vodafone Idea (Vi). Vi is also expecting to raise another Rs 14,500 crore from promoters and external investors. If things go positive for the telco on both ends, it would help a lot with the upcoming 5G spectrum auctions.

Highlights

  • Bharti Airtel and Vodafone Idea (Vi), the private telecom operators in India might get up to Rs 23,000 crore in total from the Department of Telecommunications (DoT).
  • DoT has offered the telcos a moratorium of four years on the payment of AGR dues, there’s no need to maintain BGs as they are useless at the moment.
  • Vi has been criticised for not being able to scale up investments in 4G networks and match the capex levels maintained by Airtel and Jio.

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Airtel Vodafone Idea

Bharti Airtel and Vodafone Idea (Vi), the private telecom operators in India, might get up to Rs 23,000 crore in total from the Department of Telecommunications (DoT). Both the telcos have to pay thousands of crores in adjusted gross revenue (AGR) dues to the DoT. To ensure the security of the payment against AGR dues, the telcos have to submit a Bank Guarantee (BG) to the DoT.

But since the DoT has offered the telcos a moratorium of four years on the payment of AGR dues, there’s no need to maintain BGs as they are useless at the moment.

According to an ET Telecom report, DoT is working on a Cabinet note which will propose returning of BGs worth Rs 23,000 crore to Vodafone Idea and Bharti Airtel. Out of this, Vodafone Idea is expected to get Rs 15,000 crore, and Bharti Airtel is expected to get Rs 7,000 to Rs 8,000 crore.

Vodafone Idea Had Already Asked DoT to Return BGs

The cash strapped Vodafone Idea (Vi) had already asked the DoT to return BGs worth Rs 15,000 crore against AGR dues. Vi had said that since there are no AGR dues payments in scope, why should the DoT hold BGs.

If the Cabinet note is favoured, it will be of big help to the struggling Vodafone Idea (Vi). Vi is also expecting to raise another Rs 14,500 crore from promoters and external investors. If things go positive for the telco on both ends, it will help a lot with the upcoming 5G spectrum auctions.

Vi has been criticised for not being able to scale up investments in 4G networks and match the capex levels maintained by Airtel and Jio.

If the telco gets all this money, it will be able to help itself to a certain extent in this regard. However, a decision on the Cabinet note will take some time, but it should come before the start of spectrum auctions.

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