The apex body of telecom operators has welcomed the government’s decision to waive submission of “Bank Guarantee” for telecom service providers for spectrum purchased by them before 2022.
“Cellular Operators Association of India (COAI) welcomes the Union Cabinet’s move and thank the Government on approving the waiving of bank guarantee for telecom operators on spectrum purchased before 2022,” the association said in a statement.
This landmark decision will significantly help reduce the financial burden on the telecom operators in the country.
“While we are studying the details of the decision and will be able to have a more substantial view of the same, we feel positive that this decision will enhance cash flow, free up capital and enable capital investments in network expansion and technology upgrades, ensuring a stronger and robust rollout of telecom networks in the future,” Lt. Gen. Dr. S.P. Kochhar, Director General, COAI said.
According to norms, the telecom operators have to give bank guarantee for the amount to be paid to the government and it entails administrative cost to the companies. Besides this also blocks or limits fund raising capacity by the operators.
This was one of the main demands by the beleaguered telecom operators Vodafone Idea. The decision will help Vi at least in the short run. Other telecom operators like Airtel and Reliance Jio would also stand to gain by the decision.
