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New Delhi: The department of telecommunications (DoT) has returned bank guarantees (BGs) to Bharti Airtel and Vodafone Idea, according to an affidavit filed by the department in the Supreme Court. The bank guarantees amount to nearly ₹23,000 crore.
The department has told the apex court that the BGs have been returned since the carriers had opted for a moratorium on spectrum auction instalments and no such instalment payments were due till post the moratorium period ends in 2025.
The move will come as a major relief to debt-laden Vodafone Idea which has been seeking return of the BGs from the government, which will help it lower its debt by a massive ₹15,000 crore. The reduction in debt will further be helped by the conversion of interest on the dues - from adjusted gross revenue and spectrum payments amounting to ₹16,000 crore – into equity to be held by the Indian government. Vodafone Idea’s total debt pile is nearly ₹1.9 trillion.
VIL has recently got ₹4,500 crore from its promoters Vodafone Group and Aditya Birla Group, and it is in talks with investors to raise another ₹10,000 crore through equity or debt or other instruments, in order to give itself arsenal to compete with larger rivals Reliance Jio and Bharti Airtel and for buying 5G airwaves in the upcoming spectrum auctions.
According to sources, the bank guarantees amount to about ₹7,000- ₹8,000 crore have been returned to Airtel.
“Pursuant to the Cabinet decision and in the view of the fact that VIL and BAL had opted for such moratorium on spectrum auction instalments and no installment due necessitating security in the form of financial BGs till 13 months before the next payable instalment post moratorium period, DoT has returned the existing bank guarantees submitted by VIL and BAL, which were for securitizing the deferred annual spectrum installments in respect of the past auctions," the affidavit submitted by the DoT in the Supreme Court said. Mint has seen a copy.
The payments were due for auctions held in 2012,2014, 2015 and 2016.
The DoT told the Court that the telcos have been directed to submit FBGs of equal to next payable instalment, including the part of the deferred amount due with the instalment, 13 months before the next due date after the moratorium period.
Bharti Airtel and Vodafone Idea did not comment on the development as of Friday afternoon.
The details were shared by DoT in an affidavit that it has to file annually with the Supreme Court following the decision taken by the Court on AGR dues.
The moratorium announced by the government was part of the relief package in September 2021 which allowed telcos the option to pay the principal portion of the spectrum and AGR dues to the government after four years, over 10 years.
The package has also slashed the amount of BGs to 20% of statutory dues demanded that telcos will have to pay 13 months before the payment due date, hence reducing the overall demand to a large extent.
The government had said last month that it will return the bank guarantees provided by telecom operators. The minister of state for communications Devusinh Chauhan had said in a written response to a question in Lok Sabha that the process will be completed.
“In view of the fact that they (operators) have opted for such a moratorium, no instalment is due necessitating security in the form of BGs till 13 months before the next payable instalment post moratorium," Chauhan had said.
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