Vodafone Idea Asked to Provide Rs 6,090 Crore Bank Guarantee: Report

This bank guarantee is intended to cover a one-time payment shortfall for spectrum acquired after 2015.

Highlights

  • The company can opt to make a cash payment of Rs 5,493 crore instead.
  • The shortfall pertains to spectrum payments from the 2015 auction.
  • Telecom reforms of 2021 eliminated bank guarantee requirements for later auctions, but the 2015 auction remains an exception.

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Vodafone Idea Asked to Provide Rs 6,090 Crore Bank Guarantee: Report
The Department of Telecommunications (DoT) has asked Vodafone Idea (VIL) to furnish a bank guarantee of Rs 6,090 crore to cover a one-time shortfall in payments for spectrum acquired after 2015. The telecom operator has been given a deadline of March 10 to comply, Moneycontrol reported, citing sources.

Also Read: Vodafone Idea Reports Rs 6,609 Crore Loss, Plans 5G Rollout in Mumbai by March 2025




DoT’s Directive and Payment Options

To ease the financial burden, the government has offered VIL the option to make a cash payment of Rs 5,493 crore instead. However, the company must choose between the two options and meet the deadline and comply with the DoT's directive, according to the report.

VIL CEO Akshaya Moondra during the Q3 earnings call stated that discussions with the DoT are ongoing to finalise the exact amount payable. In December, the company clarified that no bank guarantees were required for spectrum auctions in 2012, 2014, 2016, and 2021. However, a shortfall remains for the 2015 auction, as the net present value (NPV) of payments made is lower than the pro-rated spectrum value.

"We are in discussion with the DoT to determine the final amount of this partial shortfall for the 2015 auction," the telco had said in its December statement.

Also Read: Government Waives Bank Guarantees; Vodafone Idea Sees Boost for 4G, 5G Investments

Bank Guarantee Exemptions

The 2021 telecom reforms eliminated the need for bank guarantees for future spectrum auctions. In December 2023, the DoT extended this waiver to past auctions, provided the payments made exceeded the pro-rated spectrum value. However, the 2015 auction remains an exception for VIL.

Reported By

Kirpa B is passionate about the latest advancements in Artificial Intelligence technologies and has a keen interest in telecom. In her free time, she enjoys gardening or diving into insightful articles on AI.

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