Vodafone Idea has missed the deadline for submitting a bank guarantee worth Rs 6,091 crore towards the shortfall in its 2015 spectrum auction dues, sources said. The department of telecommunications (DoT) had directed the company to either furnish the bank guarantee or make a cash payment of Rs 5,493 crore by March 10.
This development comes after DoT provided Vodafone Idea with a waiver of Rs 24,800 crore in bank guarantees for spectrum auctions held in 2012, 2014, 2016 and 2021.
However, there was a shortfall towards 2015 spectrum auction dues. The issue is significant as Vodafone Idea had requested DoT to waive this amount too.
Sources say the company is still in discussions with DoT for a possible resolution, as it lacks the necessary funds to meet either requirement.
A query sent to Vodafone Idea did not receive a response at the time of going to the press.
Meanwhile, DoT is expected to send a formal notice to the telecom operator, seeking an update on its previous demand and an explanation for the delay. “We will take action as per the terms and conditions of the licence and spectrum allocation,” a DoT official said.
As per existing regulations, failure to submit the bank guarantee could result in the government reclaiming the spectrum. The bank guarantee serves as a safeguard for the government in case a telecom operator fails to meet its spectrum payment obligations.
The 2021 telecom reforms removed the requirement for bank guarantees in future spectrum auctions. Initially, telecom operators such as Bharti Airtel and Vodafone Idea were mandated to provide bank guarantees for their spectrum payments at least 13 months in advance. However, DoT recently relaxed this rule for spectrum purchased in 2012, 2014, 2015, 2016 and 2021, subject to a key condition.
The relaxation applies only if the total payments already made by a telecom operator, on a net present value basis, exceed the pro-rated value of the spectrum in use. Vodafone Idea meets this condition for most auctions but falls short in the case of the 2015 auction.
Despite having a cash and bank balance of Rs 12,090 crore, Vodafone Idea has allocated these funds towards ongoing capital expenditures, particularly network expansion. Analysts believe that securing a bank guarantee would be challenging, as the company is already engaged in discussions with banks to raise Rs 25,000 crore in debt.
Moreover, if Vodafone Idea diverts funds from its cash reserves to meet DoT’s demand, its network expansion plans would likely be disrupted.
As of December 31, 2024, Vodafone Idea’s total payment obligations to the government stood at Rs 2.27 lakh crore. This includes deferred spectrum payments scheduled until FY44 and adjusted gross revenue (AGR) dues, including accrued interest, payable until FY31. The company’s AGR liability alone stands at Rs 77,000 crore.
The four-year moratorium on AGR and spectrum payments, granted as part of the 2021 telecom relief package, is set to expire in FY26. According to an analysis by CLSA, Vodafone Idea could face severe financial distress in the second half of FY26 or FY27 when annual payments of $4-5 billion (around Rs 40,000 crore) to the government become due.
