The Department of Telecommunications (DoT) is reportedly mulling over the idea of waiving bank guarantees for deferred spectrum instalments, on the condition that telecom firms agree to pay an additional three months’ instalments annually. This development could potentially be a boon for companies like Vodafone Idea, Reliance Jio, and Bharti Airtel.
What Happened: The DoT has drafted a cabinet note to waive the requirement of bank guarantees for securitisation of deferred spectrum instalments, following a request by Vodafone Idea, as per a report by the Economic Times. However, the waiver will only be considered if the telecom company agrees to pay an additional three months' amount along with the annual payment.
The proposed waiver terms would apply for spectrum auctions of 2012, 2014, 2015, 2016, and 2021, provided the companies agree to the terms. This move could see a higher annual outgo for the telecom companies, which have been grappling with cash crises.
See Also: Axis Bank Trades More Than 1% Lower Ahead Of Q2 Result: What To Expect
The moratorium for spectrum auction dues for Vodafone Idea ends in October 2025, and bank guarantees have to be submitted 13 months before the next due date of payment. If the draft gets cabinet approval, there won’t be any requirement for bank guarantees.
The proposed waiver comes at a crucial time for Vodafone Idea, which has been actively preparing for the launch of its 5G services in Delhi and Mumbai by March 2025. The company is also on the verge of finalising its IT outsourcing contracts, aiming to diversify its vendor base and reduce its dependence on IBM.
Earlier, the DoT had reportedly requested a revival plan from Vodafone Idea for the next four to five years before it could approve a bank guarantee exemption. The proposed waiver could ease the financial burden on the troubled telecom giant, enabling it to focus on its strategic initiatives and future plans.
Price Action: Vodafone Idea’s share price was down 1.29% to trade at ₹9.17 on Thursday afternoon.
Read Next: Tata Power Secures 35-Year Power Transmission Project From REC Power Development
Engineered by Benzinga Neuro, Edited by Utkarsh Roshan
The GPT-4-based Benzinga Neuro content generation system exploits the extensive Benzinga Ecosystem, including native data, APIs, and more to create comprehensive and timely stories for you. Learn more.
Don't miss a beat on the share market. Get real-time updates on top stock movers and trading ideas on Benzinga India Telegram channel.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.