Bank guarantee waiver to help telcos expand networks, upgrade tech: Industry

New Delhi: Industry players on Tuesday welcomed the Union Cabinet’s move to waive bank guarantees for telecom companies, saying it would significantly help reduce the financial burden on the telecom operators in the country.

The decision is expected to offer significant relief to major telecom companies, which collectively owe over Rs 30,000 crore in bank guarantees to the government.

“We welcome the Union Cabinet’s move and thank the government on approving the waiving of bank guarantee for telecom operators on spectrum purchased before 2022. This landmark decision will significantly help reduce the financial burden on the telecom operators in the country,” said Lt Gen Dr SP Kochhar, Director General, Cellular Operators Association of India (COAI).

The Department of Telecommunications (DoT) had earlier proposed the move, responding to industry demands for relief. Telecom companies had written to the DoT, urging the removal of bank guarantee requirements for pre-2022 spectrum acquisitions.

This decision builds on the 2021 Cabinet reforms, which waived the need for bank guarantees on spectrum acquired prospectively.

“While we are studying the details of the decision and will be able to have a more substantial view of the same, we feel positive that this decision will enhance cash flow, free up capital and enable capital investments in network expansion and technology upgrades, ensuring a stronger and robust rollout of telecom networks in the future,” said COAI.

According to reports, Vodafone Idea is likely to submit BGs totalling approximately Rs 24,600 crore. The September 2021 telecom reforms provided telcos with a four-year moratorium on spectrum payments and adjusted gross revenue dues.

Shares of telecom companies like Tata Teleservices (Maharashtra) and Vodafone Idea, among others, went up on the BSE on Tuesday after the Cabinet’s decision.

–IANS