Bharti Airtel Will Not Convert Deferred Interest Dues Into Equity for Government

Bharti Airtel’s total AGR dues were estimated to be Rs 58,254 crore out of which the telco has already paid Rs 18,004 crore. While the moratorium is there, the interest on the leftover dues would be significant for the telco to pay.

Highlight

  • Bharti Airtel along with Vodafone Idea (Vi) had earlier accepted the moratorium on adjusted gross revenue (AGR) and spectrum dues.
  • Bharti Airtel, India’s second largest telecom operator has confirmed that it won’t be converting the deferred interest dues into equity for the government.
  • Bharti Airtel would be able to utilise all the money saved for investing in 5G and expanding the reach of 4G in India.

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Bharti Airtel

Bharti Airtel, India’s second-largest telecom operator, has confirmed that it won’t be converting the deferred interest dues into equity for the government. In a regulatory filing on Friday, Airtel said that it had communicated its decision to the Department of Telecommunications (DoT) about the same. The decision seems logical given that Bharti Airtel has already received huge ease in cash flow as the DoT returned the bank guarantees (BGs) on top of the moratorium on statutory dues.

Bharti Airtel, along with Vodafone Idea (Vi), had earlier accepted the moratorium on adjusted gross revenue (AGR) and spectrum dues. Vodafone Idea is yet to make an announcement regarding the same, but the industry experts believe that Vi will go ahead with the option of converting deferred interest dues to equity for the government.

Bharti Airtel Has Only Paid Small Part of AGR Dues

Bharti Airtel’s total AGR dues were estimated to be Rs 58,254 crore, out of which the telco has already paid Rs 18,004 crore. While the moratorium is there, the interest on the leftover dues would be significant for the telco to pay.

But if the business keeps booming for Bharti Airtel, it is something that the company might be able to survive. By accepting the moratorium on payments, analysts believe that Bharti Airtel would get a cash flow relief of approximately Rs 11,500 crore annually. It is a significant relief, and further, the reduction in spectrum usage charges (SUC) and license fees (LF) will also make a big difference.

Bharti Airtel would be able to utilise all the money saved for investing in 5G and expanding the reach of 4G in India. 5G spectrum auctions would require the telcos to spend thousands of crores, and the companies would want to save as much as possible. Bharti Airtel investors would be very happy with the telco’s decision on not converting the interest dues to equity for the government.

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