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The Department of Telecommunications (DoT) plans to send bank guarantee (BG) waiver letters to all telecom operators in the next few days, giving a fillip to struggling Vodafone Idea (Vi), which was earlier bound to provide BGs worth more than ₹24,700 crore. Once communications minister Jyotiraditya Scindia gives the go-ahead, the letters will be sent to the telcos immediately, officials said.
"The letters containing provisions of the BG waiver will be sent to telcos soon. The latest reform will enable continued investments in the telecom sector," said one of the officials, who did not wish to be identified.
The Cabinet had approved the BG waiver last month.
With the latest step, telcos need not give any BGs for any of the past spectrum auctions. Only in case of a shortfall in payments,a certain BG needs to be provided.
While the BG waiver applies to all telcos, Vi is the main beneficiary of the measure. Of the ₹33,000 crore worth of BG relief to the telecom sector, nearly ₹25,000 crore will be for Vi.
The BG waiver will give lenders more leeway to extend credit to Vi, which is looking to raise debt urgently to expand 4G operations speedily and roll out 5G in a bid to take on rivals Reliance Jio and Bharti Airtel effectively on the ground, said experts.
The waiver terms would apply to the spectrum auctions of 2012, 2014, 2015, 2016 and 2021, subject to the companies agreeing to the terms, and there won't be any immediate financial implications for the government. The telecom reforms package announced in 2021 had rationalised the need to submit BGs. Based on the package, spectrum auctions conducted in 2022 and 2024 did away with the requirement for BGs.
This is the second instance where the DoT has amended the notice inviting application (NIA) for past spectrum auctions.
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