Bharti Airtel has opted for the four-year spectrum and adjusted gross revenue (AGR) payment moratorium benefit given by the government. According to an ET Telecom report, the second-largest telecom operator in the country stands to save up to Rs 35,000 to Rs 40,000 crore from this move. A few days back, Vodafone Idea (Vi) had opted for the payments moratorium benefit as well. Vi also stands to save up to Rs 60,000 crore from the said move.
Bharti Airtel Yet to Decide on Equity Conversion Option
The telecom operators were also given the option of converting the accrued interest on dues into equity for the government. However, Airtel has not reverted about the same to the government yet.
The Department of Telecommunications (DoT) had recently communicated to the operators that they had to decide whether they want to opt for the payment moratorium by October 29, 2021. With the bank guarantees (BGs) sharply reduced and the DoT working on measures to reduce litigation in the sector, all the private operators will be able to save a lot of their money.
Bharti Airtel wasn’t cashflow negative like Vodafone Idea (Vi), but the telco will definitely appreciate the benefit offered by the government. All the extra cash saved can be put to better use such as the development of new technologies for 5G.
Airtel recharge plans are also going to get more expensive after the tariff hikes kick in. This will further allow the telco to maximise its revenues and profits. Neither Vi nor Airtel has said anything about the equity conversion yet and the telcos will strongly think about it before communicating anything with the government. Vi can choose the equity conversion option as it will cement its position as a going concern in the market. Bharti Airtel might not go the equity route because it can pay for the interest accrued.