NEW DELHI: Telecom service provider Vodafone Idea Limited (VIL) has welcomed the Indian government’s decision to waive the Bank Guarantee (BG) requirement for the purchase of spectrum, calling it a significant relief for the telecom industry.
The company added that this move would not only ease the financial burden on telecom operators but also boost investments in 4G and 5G network infrastructure in India.
The government’s move is particularly beneficial to Indian telecom operators, especially Vodafone Idea, which has been grappling with significant financial strain.
Under the 2021 telecom reform package, the government had already waived the BG requirement for spectrum auctions conducted after the reforms, citing that the industry had matured and no longer needed this form of financial security.
“Department of Telecommunication, Government of India further extended its support to the telecom industry by dispensing with the requirement of Bank Guarantee to be submitted for spectrum auctions held prior to reform package i.e. for spectrum auctions of 2012, 2014, 2015, 2016 and 2021, provided the pro-rated value of spectrum used from the date of allocation till the end of three (3) months after the due date of payment of next instalment is less than the value of payment made by the telecom operator on an NPV basis,” said Vodafone Idea in an exchange filing.
Prior to these reforms, Vodafone Idea was required to provide BGs aggregating to approximately R24,800 crore for each spectrum installment, 13 months before the installment’s due date for the auctions.