In an effort to reduce the financial strain on Indian telecom providers, especially VI, the Cabinet has approved a plan to eliminate the bank guarantees (BGs) previously mandated for spectrum purchases made until 2022. This initiative is anticipated to provide significant relief to large telecom firms, which collectively owe more than Rs 30,000 crore in BGs to the government. VI, with a debt exceeding Rs 20,000 crore, is expected to gain the most from this waiver. The relief will pertain to bank guarantees linked to spectrum purchases from auctions conducted in 2012, 2014, 2015, 2016, and 2021.
The telecom industry, represented by the Cellular Operators Association of India (COAI), has long been pushing for this change. After the government’s 2021 telecom reform package, which removed the BG requirement for auctions starting in 2022, operators were seeking comparable relief for previous auctions. Although the 2021 reforms abolished BG obligations for spectrum acquired in auctions from 2022 onward, telecom companies continued to encounter BG requirements for delayed payments related to earlier spectrum purchases.
In August, COAI officially reached out to Telecom Secretary Neeraj Mittal, requesting the removal of BG requirements for spectrum acquired before 2022. The association contended that this action would improve the financial flexibility of telecom operators, allowing them to reinvest in network development and enhance service quality.