Airtel seeks level playing field as DoT considers Vi’s request to waive bank guarantees

NEW DELHI: At a time when the government is considering Vodafone Idea’s request for a waiver of spectrum bank guarantees, Bharti Airtel has asked the Department of Telecommunications (DoT) to treat all players equally, irrespective of their “financial health”.

In a letter to the DoT, Airtel said it supports the proposed waiver, but any regulatory reform must have a “non-discriminatory” framework across all telcos, without considerations such as the financial health of particular operators, officials aware of the development told ET.

Vodafone Idea has cited its financial challenges while seeking help from the government in terms of waiving the need for bank guarantees (BGs) to protect spectrum payments – a move which, it expects, will allow banks more headroom to extend credit to the struggling telco.


Airtel in its letter pointed out that it too had acquired spectrum worth thousands of crores and needed to submit BGs in the coming months for airwaves acquired in auctions before 2021, officials said.

The Sunil Mittal-led telco cited the 2021 telecom reforms which treated all the telecom players equally with no special benefit to any one company. In August, the Cellular Operators Association of India (COAI), representing all private telcos, too had written to the DoT, seeking to do away with the need of BGs for auctions conducted before 2022.

ET had earlier reported that DoT had floated a draft cabinet note regarding the BG waiver provisions, which state that a waiver can only be considered if the telco agrees to pay an additional three months’ amount along with the annual payment. If the draft gets cabinet approval, there won’t be any requirement for BGs, but the telcos will have to pay instalments covering payments for 15 months, with instalments for three extra months acting as a security for the next year’s payments.

While the waiver has been planned primarily to aid Vodafone Idea, rivals Bharti Airtel and Reliance Jio, too, stand to benefit as the government policy typically applies to all.

Vodafone Idea, though, will be the primary beneficiary as its BG amount is the highest among all players.

Overall, the financially struggling telco needs to submit BGs for about Rs 24,700 crore to the government in the coming months. The amount of Jio’s annual bank guarantee requirement for past auctions could be to the tune of Rs 4,000 crore while the amount for Airtel could be around Rs 3,000 crore. Both the telcos have been clearing past spectrum dues by pre-paying instalments in a bid to save interest costs.

Having raised Rs 24,000 crore via equity, Vodafone Idea now wants to raise Rs 25,000 crore more via loans and another Rs 10,000 crore in BGs or letters of credit to continue its capital expenditure to compete effectively against Airtel and Jio. But banks have been cagey due to the telco’s stressed finances and have been seeking more corporate guarantees to extend any credit.

The issue around submission of BGs came up as the DoT in late 2021 returned all the BGs as no instalment was due for 35 months. The September 2021 telecom reforms allowed the telcos to avail a four-year moratorium for spectrum and adjusted gross revenue (AGR) dues.

As per the DoT’s proposal, the waiver terms would apply for spectrum auctions of 2012, 2014, 2015, 2016 and 2021, subject to the companies agreeing to the terms and conditions of waiver provisions.