The Department of Telecommunications (DoT) has issued a notice to Vodafone Idea for failing to submit the required bank guarantees linked to its past spectrum auction dues. This notice comes as the DoT discusses with the finance ministry the possibility of waiver of the bank guarantee requirement, although no official decision has been made, according to an ET report.
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Financial Obligations and Deadlines
Reportedly, the joint venture between the UK’s Vodafone Group and India’s Aditya Birla Group did not provide the necessary bank guarantees on time for spectrum dues from auctions held prior to 2022.
“We have written to Vodafone Idea to submit the bank guarantees… the bank guarantee was due in the second half of September, but the company has not submitted it yet," the report quoted a person privy to the details as saying.
Vodafone Idea's moratorium on these dues is set to expire in September 2025, necessitating the submission of bank guarantees at least a year in advance to secure these payments. The guarantees are to be submitted in phases for various auctions, with the first tranche expected by September 20.
The report quoted another official saying "Vi needs to submit bank guarantees worth a total of over Rs 24,700 crore to the government in the coming months."
Potential Waiver of Bank Guarantees
According to the report, Officials however said that the DoT initially dismissed the proposal to waive the bank guarantee requirement, as it was clearly stated in the notice inviting applications (NIA) for the respective spectrum auctions. The NIA terms are mandatory for both the government and the companies involved.
However, the issue of waiving the bank guarantee was revisited, considering Vi's financial circumstances and the reforms package introduced in 2021, which aimed to streamline the bank guarantee submission process. As a result of this package, the spectrum auctions held in 2022 and 2024 no longer required bank guarantees.
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Impact on Other Telecom Players
In case the DoT decides to waive the bank guarantee requirement for past auction dues, Reliance Jio and Bharti Airtel, along with Vi, will also benefit to an extent, the report said.
