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‘Telcos opting for moratorium to see bank guarantee fall to 20%’

The DoT had also said telecom service providers would not be required to submit a separate bank guarantee for each licenced service area, and instead only one guarantee would be required of them in future.

The DoT had announced rationalisation of bank guarantee requirements. (File)

Telecom service providers which opt for the moratorium being offered by the Department of Telecommunications (DoT) will see their bank guarantee requirements come down to only 20 per cent of what they are required to pay currently, thereby freeing them of non-funded debt, sources in the know of the development said.

“So, say Vodafone Idea (Vi) opts for the moratorium. For spectrum they will have to furnish no bank guarantees for the next 2 years and eleven months. So that means, out of Rs 23,000 crore, their bank guarantees are worth Rs 15,000 crore for spectrum. This means it will come down to roughly Rs 200-300 crore, which is for the 2021 spectrum auctions,” a senior government official said.

Bharti Airtel, which has already said that it would take up the DoT’s offer of four year moratorium on adjusted gross revenue (AGR) and deferred spectrum payments, will also see a similar reduction in their bank guarantee requirements, the official said. As part of the reforms, the DoT had announced rationalisation of bank guarantee requirements against License fee and other similar levies. The DoT had also said telecom service providers would not be required to submit a separate bank guarantee for each licenced service area, and instead only one guarantee would be required of them in future.

Further, no bank guarantees will be required to secure payments of instalment of dues for auctions held in the future.

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Currently, telecom services providers are, as per the Unified Access Services License agreement, required to submit financial bank guarantees to the DoT for various purposes, such as payment of licence fee, spectrum usage charges, deferment of these charges, and for adjusted gross revenue payments.

With the new changes, these requirements will be a thing of the past, the official said, thereby also cutting down on the future exposure of banks and financial institutions to the telecom companies.

First published on: 17-09-2021 at 04:04:45 am
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