NEW DELHI: In a move aimed at easing the financial burden on Indian telecom service providers, particularly Vodafone Idea Limited, the Cabinet has approved a proposal to waive the bank guarantees (BGs) that telecom operators were required to provide for spectrum purchases up to 2022.
This decision is expected to offer significant relief to major telecom companies, which collectively owe over Rs 30,000 crore in BGs to the government. Vodafone Idea, which owes over Rs 20,000 crore, stands to benefit the most from this waiver.
The relief will apply to bank guarantees associated with spectrum purchases made in auctions held in 2012, 2014, 2015, 2016, and 2021.
The telecom sector, represented by the Cellular Operators Association of India (COAI), had long been advocating for this move. Following the government’s 2021 telecom reform package, which eliminated the BG requirement for auctions starting in 2022, operators sought similar relief for past auctions.
While the 2021 telecom reforms eliminated BG obligations for spectrum purchased in auctions from 2022 onward, telecom companies had continued to face BG requirements for deferred payments related to spectrum bought in earlier auctions.
In August, COAI formally wrote to Telecom Secretary Neeraj Mittal, urging the removal of BG requirements for spectrum purchased before 2022. The association argued that such a step would enhance the financial flexibility of telecom operators, enabling them to reinvest in network expansion and improve services.