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.