Vodafone Idea (Vi) and Bharti Airtel will be getting back bank guarantees worth Rs 23,000 crore from the government. Out of this, Vi will get back Rs 15,000 crore of BGs while Airtel will get up to Rs 7,000 or Rs 8,000 crore worth of BGs. Minister of state for communications, Devusinh Chauhan, said the government has decided to return the bank guarantees to the telcos. The telecom operators will only have to refurnish bank guarantees for their next instalment payment 13 months before its due date.
According to an ET Telecom report, Chauhan told the Lok Sabha that since both Vi and Airtel have opted for moratorium relief, they don’t have any instalment due in the next 13 months for a long-time.
Thus the government is planning to return the bank guarantees to the telecom operators for the dues pertaining to the 2012, 2014, 2015, and 2016 spectrum auctions. The telcos have already opted for a moratorium for payment on the dues related to these auctions.
Vodafone Idea Would be Able to Invest in 4G Networks
Vodafone Idea (Vi) will immediately be in a much better position if it gets Rs 15,000 crore back from the government. The cash-strapped telco is also trying to raise another Rs 15,000 crore from the promoters and external investors.
With all this capital, the telco will be able to increase its capex level or 4G and 5G (later) to match what Jio and Airtel are spending on their networks. It will further give Vi more flexibility during the 5G spectrum auctions.
Talking about Airtel, there’s no doubt that the telco is already in a great position to make fresh acquisitions and raise funds from the market without any problems. The telco is cash-flow positive, and with the return of BGs worth up to Rs 8,000 crore, it will be able to participate in the 5G spectrum auctions with a more freehand.