NEW DELHI: In a reprieve for financially-crippled Vodafone Idea and the broader telecom industry, the Union Cabinet on Monday eliminated the need to submit hefty bank guarantees towards past spectrum purchases, with the relief expected in excess of Rs 30,000 crore for the various players.
While a substantial part of the benefit will flow in for the cash-strapped Vodafone Idea – which is estimated to have bank guarantee needs of over of Rs 24,000 crore – others such as market leader Reliance Jio and Airtel will also gain in good measure.
“The Cabinet has approved the relief as we believe that this does not alter the payment schedules demanded from the companies. The measure will help maintain the health of the industry and enable companies to better manage their financial cash flows and investment needs,” a senior official aware of the development told TOI.
“There are also certain conditions that companies will need to meet. We had incorporated the conditions to ensure that the exchequer is protected from any potential payment defaults, if they ever happen,” the source added.
The telecom industry, led by industry body Cellular Operators Association of India (COAI), had also been demanding the waiver of bank guarantees after the govt through a reform package announced in 2021 eliminated the need for them starting 2022.
The current relief covers bank guarantees required towards spectrum payments purchased in auctions held in 2012, 2014, 2015, 2016, and 2021.