NEW DELHI: Welcoming the government’s historic decision to waive bank guarantees for telecom spectrum acquired before 2022, industry players on Tuesday said such supportive policy measures are conducive to technological innovation. Play an important role in creating environment and developing digital infrastructure, especially in rural areas.
The decision is expected to provide significant relief to leading telecom companies, particularly Vodafone Idea, which collectively owe the government more than Rs 30,000 crore in bank guarantees.
“We welcome this move by the Union Cabinet and thank the government for approving waiver of bank guarantee for telecom operators on spectrum purchased before 2022. This historic decision will reduce the financial burden on telecom operators in the country. will significantly help in reducing,” said Lt. Gen. Dr. SP Kochhar, Director General, Cellular Operators Association of India (COAI).
The Department of Telecommunications (DoT) had earlier proposed the move in response to industry demands for relief. Telecom companies had written to the DoT, urging the scrapping of bank guarantee requirements for acquiring spectrum before 2022.
The decision is based on the 2021 Cabinet reforms, which eliminated the need for a bank guarantee on potentially acquired spectrum.
“While we are studying the details of this decision and will be able to have a more concrete view on it, we feel positive that this decision will increase cash flow, free up capital and Investment in network expansion and technology upgrades will ensure a strong and robust rollout of telecom networks in the future,” COAI said.
Vodafone Idea is expected to submit a bank guarantee of around Rs 24,600 crore. Its share closed up more than 9 percent at Rs 7.61 on Tuesday.
The September 2021 telecom reforms had provided telcos with a four-year moratorium on spectrum payments and adjusted gross revenue liabilities.
Digital Infrastructure Providers Association appreciates Cabinet’s strategic move to waive bank guarantees for telecom spectrum
Manoj Kumar Singh, Director General, Digital Infrastructure Providers Association (DIPA), said the exemption, which extends to spectrum acquisitions made before 2022, builds on forward-thinking reforms launched in 2021.
“By retroactively removing bank guarantee requirements, the government has created a more flexible financial environment that enables telecom operators to optimize their capital allocation, increase liquidity, and accelerate infrastructure investment. This decision is particularly important for operators like Vodafone Idea, which are facing complex financial challenges,” added Singh.
Bank guarantees traditionally involve a substantial capital tie-up, with telecom operators typically retaining 3-5 percent of the spectrum auction price as a guarantee, which translates into hundreds of crores of rupees.
By removing these guarantees to acquire spectrum before 2022, the government is effectively unlocking significant working capital that can be strategically reinvested in network infrastructure, technology upgrades, and expansion of digital connectivity. can go
“Bank guarantees have been a significant financial constraint for telecom operators. This waiver will provide immediate liquidity relief, enabling operators to redirect financial resources towards critical infrastructure development, particularly in non- in safe and rural areas,” said Singh.
The timing of this intervention is particularly important. As India rapidly moves towards 5G deployment and prepares for the upcoming 6G stack, such supportive policy initiatives are instrumental in creating an enabling environment for technological innovation, DIPA said.