DoT accepts telcos’ plea to accept bank guarantees valid for 1 year

The Department of Telecommunications (DoT) has accepted a petition from mobile phone companies seeking a truncated tenure for bank guarantees with a validity of one year instead of the mandated three as lenders are reluctant to provide fresh backing for a longer period.

Bharti Airtel and Vodafone Idea – both loss-making and facing cumulative adjusted gross revenue (AGR) dues of over Rs76,000 crore – are said to be in talks with State Bank of India (SBI), HDFC Bank and Axis Bank for fresh guarantees ahead of airwave auctions that start March 1.

The telcos need to provide bank guarantees to back their earnest money deposits (EMD) to bid in the auctions and to cover for their annual instalment amounts towards the airwaves they buy in the sale.