The telecom operators and infrastructure providers on Tuesday welcomed the Cabinet decision to waive-off bank guarantee (BG) for spectrum purchased before 2022, saying this would help reduce the financial burden on the industry.

“While we are studying the details of the decision, ... we feel positive that this will enhance cash flow, free up capital and enable capital investments in network expansion and technology upgrades, ensuring a stronger and robust rollout of telecom networks in the future,” SP Kochhar, Director General, Cellular Operators Association of India (COAI), said.

The COAI represents companies such as Bharti Airtel, Reliance Jio and Vodafone-Idea.

The telecom infrastructure providers also feel that the government has created a more flexible financial environment by removing the BG requirements retroactively, which will enable telecom operators to optimise their capital allocation, enhance liquidity and accelerate infrastructure investments.

This decision is particularly significant for operators like Vodafone-Idea, who have been navigating complex financial challenges, they said.

“At the Digital Infrastructure Providers Association (DIPA), we view this decision as a strategic intervention that will catalyse the growth and resilience of India’s telecom infrastructure. The bank guarantee waiver is not just a financial mechanism, but a powerful signal of governmental support for the digital transformation agenda,” Manoj Kumar Singh, Director General at DIPA, said.

It will provide telecom operators with much-needed breathing room to restructure their financial strategies, invest in network expansion and prepare for the next generation of digital connectivity, he said.

“Bank guarantees have traditionally locked substantial capital, with telecom operators typically maintaining three-five per cent of spectrum auction value as guarantee, translating to hundreds of crores of rupees. By removing these guarantees for pre-2022 spectrum acquisitions, the government is effectively unlocking critical working capital that can be strategically reinvested in network infrastructure, technology upgradation, and expansion of digital connectivity,” he explained.

Prashant Singhal, EY India Markets Leader and Telecom Sector Leader, said, “Easing of financial burden is likely to help telcos make necessary investments in network and align with the next growth phase in the Indian telecoms sector. Ultimately, customers stand to benefit through access to robust and future-proof telecoms network and infrastructure.”

Bank guarantees have been a significant financial constraint for telecom operators, Singh said adding that this waiver will provide immediate liquidity relief, enabling operators to redirect financial resources towards critical infrastructure development, especially in underserved and rural regions.

DIPA represents major telecom tower firms such as Indus Towers Limited, ATC India, Summit Digitel and Ascend Telecom Infrastructure.

Meanwhile, Vodafone-Idea has clarified that it has not yet received any communication from the Department of Telecommunications (DoT)/ government about any decision taken nor is there any press release available on its website.

“As and when a decision is communicated by the DoT or any decision of government of India through a press release is available, the company will make the necessary disclosures as required,” it said in a stock filing.