![\"\"](\"\/\/www.iser-br.com\/Themes\/Release\/images\/responsive\/ettelecom-default.jpg\")
MUMBAI: The government plans to return bank guarantees worth Rs 14,000 crore to Vodafone Idea<\/a> (Vi) and Rs 8,000 crore to Bharti Airtel<\/a> if they opt for a four-year moratorium on payment of spectrum dues, a person aware of the development said.
The development is expected to drastically reduce Vodafone Idea’s non-fund exposure to banks that have been hesitant to furnish fresh bank guarantees (BGs) to the loss-making telco due to its precarious financial position.
“BGs in deferred annual instalment against spectrum bought in earlier auction will be returned to telcos opting for moratorium,” the source told ET. “Vi stands to get about Rs 14,000 crore and Airtel about Rs 8,000 crore.”
Bharti Airtel chairman Sunil Bharti Mittal<\/a> on Thursday said the telco will opt for the moratorium while cash-strapped Vodafone Idea too is widely expected to opt for it.
Experts said return of bank guarantees will allow banks more leeway to lend to Vodafone Idea in the future.
“A large part of our exposure (to Vi) is towards bank guarantees to the DoT (Department of Telecommunications<\/a>),” a lender said on the condition of anonymity. “If those are returned, it gets cancelled and our exposure towards Vodafone Idea will drop significantly.”
Re-rating of the company could also lead to refinancing of existing loans at lower rates.
“We will have to see how this evolves, but in all likelihood, when the operating metrics of the telco improves, we will be able to offer them lower rates and rework loan covenants depending on how the cash flow situation improves,” the lender said.
Banks have a total exposure of a little over Rs 35,000 crore to the company, of which funded exposure is close to Rs 13,800 crore while the remaining is non-funded.
Vodafone Idea had a gross debt of Rs 1.9 lakh crore at June end – mostly in obligations to the government towards deferred spectrum charges and adjusted gross revenues (AGR)-related dues – while its cash and cash equivalents are only Rs 920 crore.