Vodafone Idea fails to renew bank guarantees amid financial constraints, seeks time

economictimes.indiatimes.com:

Vodafone Idea (Vi) has failed to renew some lapsed bank guarantees (BGs) — some as low as Rs 99 lakh — and sought more time from the Centre to replenish them, underscoring the precarious financials at the debt-laden telco that is continuously losing subscribers to two of its bigger rivals. «Due to our weak financial position, we are not in a position to issue replacement BGs of Rs 99 lakh and Rs 32.49 crore as this requires 100% cash margin to be provided to the banks,» Vi said in a letter dated July 7 to the Controller General of Communication Accounts (CGCA-revenue wing) in the Department of Telecommunications (DoT). The telco also said it has been unable to renew additional BGs of undisclosed sums issued by Kotak Mahindra Bank due to its continuing financial constraints. ET has seen a copy of the letter. Kotak's BG exposure to Vi, at present, is within Rs 10 crore, a person aware of the developments told ET.

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«All our BGs are being renewed as and when required. We have already renewed BGs worth over Rs 4,000 crore in this financial year itself,» a Vi spokeswoman said in a late evening written response to ET's queries. Vi, though, said that Kotak is unable to renew the BGs due to its own regulatory constraint, and that this was not related to the telco's credit standing. ET's queries to Kotak Mahindra Bank remained unanswered until the publication of this report. At present, BGs are submitted by telcos to DoT, and in case statutory dues like licence fees, spectrum usage charges (SUCs) or any other dues are not paid on time, the government can encash them.

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