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DoT accepts telcos’ plea to accept bank guarantees valid for 1 year
The Department of Telecommunications (DoT) has accepted a petition from cell phone firms looking for a truncated tenure for financial institution ensures with a validity of 1 yr as a substitute of the mandated three as lenders are reluctant to supply contemporary backing for an extended interval.
and – each loss-making and dealing with cumulative adjusted gross income (AGR) dues of over Rs76,000 crore – are stated to be in talks with (SBI), and for contemporary ensures forward of airwave auctions that begin March 1.
The telcos want to supply financial institution ensures to again their earnest cash deposits (EMD) to bid within the auctions and to cowl for his or her annual instalment quantities in direction of the airwaves they purchase within the sale.
A banker within the know stated that he was in talks with the 2 telcos to iron out some variations.
“The reluctance to sign off on bank guarantees is largely due to the uncertainties on the policy decisions the government would take…we are just getting out of one AGR hassle and then to commit to another round of bank guarantees we have to be sure about the future growth and financial performance of these organisations,” stated an official within the know.
The deadline for making use of to take part within the public sale has been prolonged to February 9 from February 5, giving telcos extra time to thrash out variations with the banks.
Analysts say Bharti Airtel is significantly better positioned financially, having raised $eight billion since October 2019 and its operational fundamentals fairly sturdy, in contrast with Vodafone Idea, which is quickly shedding customers, income and subscriber market share.
The telcos underlined their concern to the DoT mentioning banks’ reluctance to supply longer financial institution ensures (BGs) given the monetary stress in a sector beneath over Rs eight lakh crore of debt.
“With the current state of telecom industry banks are not agreeable to issue BGs for validly longer than one year, hence it is requested that wherever the requirement is to secure amounts of period longer than one year, a one-year BG may be allowed, which can be renewed annually, the interest of DoT will be equally protected as in the case of failure to renew the BG were required DoT can always have the right to invoke the set BG,” stated a request from from the operators. “This will help the applicants to better participate in the auction.”
The DoT has agreed to simply accept the phrases of annual renewable financial institution ensures. Though no telecom has been recognized, sources stated Airtel and Vi had made these requests
Airtel owes the federal government nearly Rs 26,000 crore in AGR dues, whereas Vi must pay about Rs 50,400 crore. Both have to pay in 10 equal instalments via March 31, 2031.
Airtel, Vi and lenders didn’t reply to ET’s queries looking for remark.
DoT goals to promote 2,250 MHz of 4G airwaves throughout seven bands from March 1 value Rs 3.92 lakh crore on the base worth. TGI