Shares of Vodafone Idea slipped nearly 6% on Monday after it was served a notice by the Department of Telecommunications (DoT) for not submitting necessary bank guarantees pertaining to past spectrum auction dues.
What Happened: The notice was issued as the joint venture between the UK’s Vodafone Group and India’s Aditya Birla Group failed to provide the required bank guarantees on time for spectrum dues from auctions conducted before 2022, The Economic Times said.
This development comes amid ongoing talks between the DoT and the finance ministry about the possible waiver of the bank guarantee requirement, although no final decision has been taken yet.
The report further mentions that Vodafone Idea’s moratorium on spectrum auction dues is set to conclude in September 2025, and the telecom giant is obligated to submit bank guarantees at least a year in advance to secure these dues. The guarantees were supposed to be submitted in phases for different auctions, with the first tranche expected by September 20.
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Vodafone Idea must provide bank guarantees totalling over ₹24,700 crore to the government in the coming months, the business daily reported, citing an official.
Vodafone Idea had previously requested a waiver from the DoT regarding the submission of these guarantees. While companies are not required to submit bank guarantees for airwaves acquired in auctions since 2022, earlier regulations required firms to provide a bank guarantee equivalent to one annual instalment.
The delay in submitting bank guarantees could potentially impact Vodafone Idea’s financial standing and its ability to participate in future spectrum auctions. The ongoing discussions between the DoT and the finance ministry could provide some relief to the telecom company if the bank guarantee requirement is waived off.
Price Action: Vodafone Idea lost 5.21% to trade at ₹9.28 on Monday morning.
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