Vodafone Idea Seeks to Eliminate Bank Guarantee Requirement for Old Spectrum

Vodafone Idea is currently in discussions with the Department of Telecommunications (DoT) to remove the requirement for bank guarantees related to spectrum acquired before 2022. This follows a report that the DoT had issued a notice to the company to pay the required bank guarantees, as no decision on waiving them has been made yet.

In a statement to the Bombay Stock Exchange (BSE), Vodafone Idea confirmed that it has presented detailed arguments to the DoT and is actively engaged in discussions about the bank guarantee requirements. The company emphasized that this request is also supported by the industry.

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The DoT is talking with the Finance Ministry about potentially removing the bank guarantee requirements. Vodafone Idea must submit these guarantees because the moratorium on its spectrum auction dues will end in September 2025. The bank guarantees need to be submitted at least a year in advance to secure the payments. Vodafone Idea is scheduled to submit these guarantees in parts starting September 20.

The total amount of bank guarantees Vodafone Idea needs to submit is over ₹24,700 crore in the coming months. Previously, the company had requested the DoT for a waiver on these guarantees. Since the rules changed in 2022, companies no longer need to provide bank guarantees for airwaves purchased in auctions from that year onward, but they were previously required to submit a bank guarantee equal to one annual installment for earlier auctions.

If the DoT decides to waive the bank guarantee requirement for past auctions, it would also benefit other companies like Reliance Jio and Bharti Airtel. Estimates suggest that Reliance Jio might need around ₹4,000 crore in bank guarantees, while Airtel could require about ₹3,000 crore.

Both Airtel and Jio have been prepaying their past spectrum dues to save on interest costs. For example, last month, Airtel paid ₹8,465 crore to the DoT for the 2016 spectrum auction.