In a major boost to the telecom sector, the Department of Telecommunications (DoT) has waived bank guarantee (BG) requirements for spectrum auctions conducted in 2012, 2014, 2016, and 2021, providing Rs 33,000 crore relief to private telecom operators.

The largest share of this benefit, amounting to Rs 24,800 crore, goes to Vodafone Idea (Vi), offering significant financial respite to the struggling telecom operator, IANS reported.

Vodafone Idea welcomed the government’s decision, calling it a transformative step toward strengthening the sector. In an official exchange filing, the company stated, “This step of BG waiver is a clear indication of the government’s continued support to the telecom industry. It will ensure that the exposure of the banking system is utilized by telecom operators toward further proliferation of 4G and 5G networks in India.”

Prior to this reform, Vi was required to provide BGs totaling Rs 24,800 crore for spectrum installment payments across multiple auctions. The waiver eliminates this requirement, easing the company’s financial burden and improving its access to credit.

The waiver comes as a lifeline for Vodafone Idea, which has been battling financial challenges and has yet to launch 5G services. The relief allows the company to redirect funds previously tied up in guarantees toward improving its 4G coverage and expediting its 5G rollout. This strategic shift is critical for Vi to compete with larger rivals Reliance Jio and Bharti Airtel, both of which are expanding their 5G networks aggressively.

However, the company noted a one-time partial shortfall from the 2015 auction, where the net present value (NPV) of payments made is less than the pro-rated spectrum usage value. “We are in discussion with the Department of Telecommunications (DoT) to determine the final amount of this partial shortfall for the 2015 auction,” the company added.

The DoT’s decision is a part of broader reforms aimed at alleviating financial stress in the telecom sector. By waiving BG requirements, the government seeks to free up banking resources and encourage operators to invest in critical infrastructure development.

Reliance Jio and Bharti Airtel, which received smaller portions of the relief, are also set to benefit, albeit to a lesser extent. For Vodafone Idea, this waiver could be a turning point, potentially enabling it to secure additional funding and improve its market position.

The development underscores the government’s commitment to fostering a robust telecom ecosystem, critical for India’s digital transformation and the proliferation of 5G services.