India's DoT scraps bank guarantee for telcos

India's DoT scraps bank guarantee for telcos

The government of India notified that for future telecom spectrum auctions telecom service providers (TSPs) do not have to submit a financial bank guarantee (FBG), in case of a successor bidder, to securitise annual spectrum installment.

A notice from the Department of Telecom­munications (DoT) said it will accordingly change the eligibility conditions for participation in the next sale so that bidders have sufficient financial capacity.

“For spectrum auctions to be held in the future, the requirement for the successful bidder to submit an FBG of an amount equal to one annual installment to scrutinize the installment; and to submit Performance Bank Guarantee (PBG) for rollout obligation, etc. has been dispensed with,” the notification said.

It said it will accordingly change the eligibility conditions for participation in the next sale so that bidders have sufficient financial capacity.

Meanwhile, DoT assured the telecom tribunal that it will not encash bank guarantees (BGs) of Bharti Airtel and Vodafone Idea until the next hearing of October 26 in the points of interconnection (PoI) case.

According to market experts, this decision will result in higher cash flows for telcos like Vodafone Idea and Bharti Airtel. It will also give more leeway for banks to lend more to the debt-ridden companies in the future.

MORE ARTICLES YOU MAY BE INTERESTED IN...


Sign-up to our weekly newsletter

Keep up-to-date with all the latest news, articles, event and product updates posted on Developing Telecoms.
Subscribe to our FREE weekly email newsletters for the latest telecom info in developing and emerging markets globally.
Sending occasional e-mail from 3rd parties about industry white papers, online and live events relevant to subscribers helps us fund this website and free weekly newsletter. We never sell your personal data. Click here to view our privacy policy.