AGR upset turns spotlight on Vi's bank guarantees

Fading hopes of securing relief on telecom companies' government dues has turned the attention to bank guarantees worth around ₹6,000 crore that Vodafone Idea Ltd, the weakest telco, has submitted to the government.

- Jatin Grover, Shayan Ghosh & Devina Sengupta

On 19 May, the Supreme Court (SC) rejected petitions from Bharti Airtel Ltd and Vodafone Idea to waive some of the dues linked to their adjusted gross revenues (AGR).

Vodafone had told the court that without bank loans that are contingent on AGR relief, it may not be able to survive the current fiscal year.

Lenders are now awaiting communication from the telecom department on the fate of these guarantees, a public sector banker said.

Vodafone Idea's plan to raise bank loans depended on potential relaxations on the adjusted gross revenues (AGR) front, which appear bleak after the SC order, the banker said.

Telcos submit bank guarantees to support their payments towards licence fees, penalties and performance obligations, among others.

Vodafone Idea has submitted guarantees worth ₹6,067.2 crore, as per data from rating agency Care Ratings.

If the government invokes these guarantees, it will be another financial blow to the telco, which is creaking under hefty losses and dues.