Vodafone Idea to Benefit Most if DoT Returns Bank Guarantees

Vodafone Idea (Vi) is going to be the biggest beneficiary out of all the private telecom operators if the government decides to return the bank guarantees to the telcos.

Published by
Tanay Singh Thakur

Vodafone Idea

Vodafone Idea (Vi) is going to be the biggest beneficiary out of all the private telecom operators if the government decides to return the bank guarantees to the telcos. The Department of Telecommunications (DoT) is likely going to tell the Supreme Court that it plans on returning the bank guarantees (BGs) to the telcos, even the BGs that are currently sub judice. According to an ET Telecom report, the returned BGs would also include the amount that the telcos had provided against the payment of spectrum dues which have been deferred for now.

DoT will, however, ask the telcos to provide BGs again when it will be a year left for the deferred dues to come up for payments. If the DoT successfully goes ahead with this move, Vodafone Idea would be the biggest beneficiary out of all the private telecom operators.

Vodafone Idea Will be Able to Get Hands-on More Liquid Cash if BGs Returned

According to the publication’s report, DoT might have to file an affidavit in the Supreme Court (SC) for returning the BGs to the telcos. Note that a large amount of BGs was there to cover the one-time spectrum charge (OTSC) payment. Amongst just Airtel and Vodafone Idea (Vi), there is about Rs 35,000 crore worth of BGs with DoT. The return of the BGs will allow the banks to increase their capital pool which in turn would allow the telecom operators to access more loans.

In the relief measures announced a few months back, the government had said that the operators would not have to provide any financial instrument to secure the instalments of payments for statutory dues. Further, the government had cut the existing BG requirements for statutory dues by 80%. This is the correct move from DoT as it would improve the liquid cash problems for the sector, especially Vodafone Idea, which has a ton of debt on its shoulders.

Tanay Singh Thakur

Tanay is someone with whom you can chill and talk about technology and life. A fitness enthusiast and cricketer, he loves to read and write.

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Tanay Singh Thakur

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