Vodafone Idea (Vi) has issued a clarification regarding the waiver of bank guarantees (BGs) for deferred spectrum payments, following a significant rise in its stock price. The telecom giant confirmed that it has not yet received official communication from the Department of Telecommunications (DoT) or the government regarding the approved waiver, even though the Union Cabinet recently cleared the proposal.
No Official Word Yet from the Telecom Department
On Tuesday, Vi responded to a clarification request from stock exchanges, stating that it had not received any formal communication about the government’s decision to waive the bank guarantee requirements for deferred spectrum payments. The company emphasized that no press release was available on the Department of Telecommunications’ website confirming the move.
Vi further added that it had made representations to the DoT requesting the removal of bank guarantee requirements for spectrum acquired before 2022, a demand that aligns with the broader industry appeal.
Impact of the Bank Guarantee Waiver
The decision to waive off bank guarantee requirements is expected to have a significant impact on the telecom sector, particularly Vodafone Idea (Vi). Vi was previously required to submit a bank guarantee of Rs 24,700 crore for spectrum payments. If the waiver is confirmed, it would provide a much-needed financial boost to the company.
Vi’s stock surged 11.2% on Tuesday, closing at Rs 7.53, following the cabinet’s approval of the proposal. This move has generated optimism in the market, as it would help Vi alleviate its financial strain.
Airtel and Jio Also Stand to Benefit
While the decision will have the most significant benefit for Vodafone Idea, both Bharti Airtel and Reliance Jio will also see some relief from the bank guarantee waiver, although the impact will be relatively smaller for these telecom giants.
Airtel was scheduled to submit bank guarantees of around Rs 2,300 crore for the upcoming year.Reliance Jio had a pending bank guarantee requirement of approximately Rs 4,000 crore.Both companies are expected to benefit from the waiver, but the overall impact on their financials will be more modest compared to Vi’s.
What’s Next for Vi and the Indian Telecom Sector?
As the DoT and the Indian government work on formalizing the waiver, Vi remains optimistic about the potential relief it would provide. The removal of this financial burden could significantly enhance Vi’s liquidity, which would be crucial for improving its market position and competitiveness against rivals like Bharti Airtel and Reliance Jio.
For the wider Indian telecom market, this development highlights the growing importance of regulatory support in ensuring the sector’s sustainability and encouraging competition.
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