Vodafone Idea on Tuesday said the company continues to be engaged with the department of telecommunications (DoT) for removal of the bank guarantee requirements for spectrum purchased before 2022 auctions.
This comes after the DoT has recently issued a notice to the company asking it to submit the bank guarantees, which it is supposed to do as per the rules, a year before the moratorium on spectrum payments expires in 2025. Accordingly, Vodafone Idea needs to submit bank guarantees to the tune of Rs 24,700 crore in tranches, starting September 20.
“The company has made detailed representations to the DoT and continues to be engaged with DoT for removal of the bank guarantee requirements for spectrum acquired before 2022,” Vodafone Idea said in an exchange filing.
“This is also an industry task. As and when a final decision is taken by the DoT, the company will make the necessary disclosures as required by law,” Vodafone Idea added.
Officials said that till the time the government does not take a decision to waive off this requirement, issuance of notice is a regulatory requirement.
Government sources said that inter-ministerial discussions are in favour of providing relief to the company. “The company is trying to raise funds for investment to improve customer services. The idea is to make the company viable,” an official said.
Notably, telcos no longer are required to submit bank guarantees as a payment security for airwaves purchased in auctions from 2022 onwards. Earlier regulations required them to submit a bank guarantee equal to one annual installment.
Vodafone Idea has also initiated a “fresh dialogue” with the government on the likely remedies in the AGR (adjusted gross revenue) dues matter after the Supreme Court recently dismissed its curative plea on re-computation of the AGR dues.
“It’s a very clear understanding with them (the government) that we are not in a position to provide bank guarantee given our current negotiation with the banks. The government itself has said the industry has matured and as a result may be bank guarantee should not be required,” Ravinder Takkar, non-executive chairman of Vodafone Idea, had said during a recent investor call. He added: “We have received positive feedback from the government.”
Once the moratorium on AGR and spectrum dues ends in September 2025, Vodafone Idea will need to pay Rs 29,100 crore by the end of March 2026 and Rs 43,000 crore annually from FY27 till FY31. If at all the government goes ahead and converts the dues, it would be for Rs 17,000 crore worth of dues, according to the company’s estimates.
From: financialexpress
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