DoT in Favour of Waiving Spectrum Bank Guarantees for Telcos: Report

The Department of Telecom (DoT) is reportedly considering towards waiving bank guarantees (BGs) for telecom operators concerning spectrum purchases made up to 2022. This decision could significantly aid Vodafone Idea, which needs to secure BGs amounting to Rs 27,000 crore in the coming months, Moneycontrol reported, citing people aware of the ongoing discussion.

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Also Read: PNB Turns Down Vodafone Idea’s Request for Fresh Financing: Report

Ongoing Discussions

According to the report, discussions between the DoT and the telecom industry are ongoing, with a general alignment on issues, except for a few that are expected to be resolved soon. Notably, the 2021 reforms exempted the upcoming 2024 auction from requiring BGs, prompting the industry to seek similar relief for previous auctions.

“A second source close to the development noted that there was room for relief, as the 2024 auction did not require bank guarantees after new rules were introduced in 2021 as part of a reforms package,” the report added.

“There is an alignment between the industry’s demand and the telecom department, except for a few issues that are expected to be ironed out soon, and the department is working on the same,” the report said, citing one of the sources as saying.

COAI Advocates for BG Waiver

In August, the Cellular Operators Association of India (COAI) urged the DoT to eliminate BG requirements for auctions prior to 2022, asserting that such a move would improve cash flow and enable increased investment in network infrastructure. They emphasised that the need for BGs is outdated since the rules have changed for future spectrum dues.