DoT Might Tell SC That Telecom Operators Will Get BGs Back

A couple of days back, news surfaced that the DoT is returning all the BGs to the telcos. Both Vodafone Idea (Vi) and Bharti Airtel will get around Rs 15,000 crore and Rs 7,000-8,000 crore back from the government as BGs. Vi has reiterated the need for the government to release the BGs pertaining to the spectrum auctions for which the dues have been deferred.

Highlights

  • Vi has reiterated the need for the government to release the BGs pertaining to the spectrum auctions for which the dues have been deferred.
  • But the telcos will have to refurnish the BGs 13 months before the end of the 4 year moratorium period which is still quite far.
  • The telecom operators will be happy in more than one ways to receive their BGs back from the government.

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The Department of Telecommunications (DoT) might tell the Supreme Court on April 7 that the telecom operators have been provided with an option to defer their annual adjusted gross revenue (AGR) payments for up to four years, said an ET Telecom report.

Each year, the government needs to submit a full compliance report to the Supreme Court (SC) and this year, the DoT will also inform that because the telcos are given relief in payment timelines, they will be returned all the bank guarantees (BGs) pertaining to that period as well.

An official told the publication that the telecom operators will also have to file this in the Supreme Court on April 7 as the apex court had asked for an annual update on the AGR dues.

DoT Returning BGs to Telcos

A couple of days back, news surfaced that the DoT is returning all the BGs to the telcos. Both Vodafone Idea (Vi) and Bharti Airtel will get around Rs 15,000 crore and Rs 7,000-8,000 crore back from the government as BGs.

Vi has reiterated the need for the government to release the BGs pertaining to the spectrum auctions for which the dues have been deferred. The cash-strapped telco desperately needs the cash as it has been unable to raise it from external investors so far.

But the telcos will have to refurnish the BGs 13 months before the end of the 4 year moratorium period which is still quite far. With the BGs released, Vi can potentially use them for the expansion of 4G and investing in 5G networks.

The telecom operators will be happy in more than one way to receive their BGs back from the government. Bharti Airtel, which is already generating free cash flows will be able to invest and acquire more aggressively before the launch of 5G. Or the telcos can potentially use the money in the upcoming 5G spectrum auctions for purchasing ample of airwaves to deliver PAN-India 5G service in the long run.

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