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In response to Vodafone Idea's request for financial assistance, Bharti Airtel has asked the Department of Telecommunications (DoT) to provide a non-discriminatory framework in any prospective waiver of spectrum bank guarantees (BGs). According to an ET article, Airtel has requested that the DoT treat all players similarly, regardless of their "financial health."
According to the article, which cited officials aware of the issue, Airtel stated in a letter to the DoT that it supports the proposed waiver but that any regulatory reform must have a "non-discriminatory" framework across all telcos, without considerations like the financial condition of particular operators.
Citing severe financial difficulties, Vodafone Idea is allegedly requesting the waiver to reduce the requirement for Bank Guarantees (BGs), which it believes will allow banks to give the faltering business additional credit. In contrast to Airtel's Rs 3,000 crore and Jio's Rs 4,000 crore obligations, the telecom must submit BGs aggregating roughly Rs 24,700 crore in the upcoming months.
The article stated that Airtel has also made significant investments in spectrum purchases and will soon have to supply BGs for airwaves acquired through auctions prior to 2021. Additionally, the Cellular Operators Association of India (COAI) has demanded that BG restrictions be removed for auctions held before 2022. According to reports, Airtel noted the 2021 telecom reforms, which gave no particular business preferential treatment and treated all telecom competitors equally.
If accepted, the waiver would enable telecom businesses to avoid BGs by agreeing to pay an extra three months' worth of payments as security for the payments in the next year, according to the DoT's proposal. Although this idea, which is pending cabinet approval, could help all companies, Vodafone Idea would be the main beneficiary due to its significant BG liabilities.
After raising Rs 24,000 crore through stock,Vodafone Idea is now seeking to obtain an extra Rs 25,000 crore through loans and a further Rs 10,000 crore through letters of credit or bank guarantees. In order to sustain its capital expenditures and successfully compete with Jio and Airtel, the company needs this investment. However, because of the telco's precarious financial status, banks have been reluctant to offer financing and have insisted on additional company guarantees.
According to reports, Vi's request for further funding was turned down by Punjab National Bank (PNB). Additionally, PNB stated that any telecom provider with a AAA rating could be eligible for a loan. This comes after Vodafone Idea's long-term loan request was reportedly turned down by Power Finance Corp (PFC) and its subsidiary, Rural Electrification Corp (REC), who raised concerns about the collateral provided and cited inconsistencies with internal underwriting rules.
Following the Supreme Court's decision, banks are reportedly reluctant to lend to Vi. Vi and its creditors' business expectations were impacted by their expectation of a favourable verdict. The court's ruling, however, has changed Vi's financial situation. Vi has been looking for money to increase its capital expenditures in order to compete with Reliance Jio and Airtel.
In the midst of an ongoing disagreement over the payment of debts owed to the government, the Supreme Court in September this year, denied telecom companies' request to recalculate their adjusted gross revenues, or AGRs. The businesses expressed worry about how the financial crisis will impact all businesses.