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.
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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.
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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.
