Bharti Airtel on Friday said it will pay the interest on deferred spectrum and adjusted gross revenue (AGR) liabilities and will not issue equity to the government.
The company said in a stock exchange notification that it had informed the Department of Telecommunications (DoT) that it will not avail the option of the conversion of interest on deferred spectrum and AGR dues into equity.
“In furtherance to the earlier communication dated October 25, 2021 and in reference to the notification dated October 14, 2021 issued by the Department of Telecommunications (DoT) to the Company, we wish to inform you that the Company has confirmed to DoT that it will not avail the option of conversion of the interest on deferred spectrum and AGR dues into equity,” the Sunil Mittal-led telecom giant said in a regulatory filing.
Last September, the Modi government had announced sweeping telecom reforms as part of which it wanted to ease the debt burden on legacy telecom companies. It had two key elements: Firstly, a four-year moratorium to pay back dues arising from the Supreme Court verdict on AGR liabilities dating back to 2007; and second, the option to convert the interest component on the dues into equity.
It is this second option that Airtel has refused to take — effectively protecting the Mittal family’s 35.8 per cent stake in the telecom company at a time the fortunes of the industry have started to turn for the better.
Bharti Airtel has already paid Rs 18,004 crore in AGR-related dues to the telecom department by March 31, 2021, which is more than 10 per cent of its total statutory dues of over Rs 43,000 crore.
The Supreme Court’s order ended the 14-year-long dispute over the definition of AGR between the DoT and telecom firms.
The DoT argued that telecom companies’ AGR included income from the sale of handsets bundled with services, dividends from subsidiaries, besides other income. It contended that the firms had underreported their revenue and, hence, paid lower taxes and levies.
The telco's latest move came as a surprise since its rival Vodafone Idea (Vi) was expected to avail both moratorium and equity conversion.
In October last year, Airtel had accepted the government’s four-year moratorium on the spectrum and AGR payments.
Last month Airtel prepaid its entire liability of Rs 15,519 crore from its 2014 acquisition of 128.4MHz spectrum.
The company had at the time said this would help in saving around Rs 3,400 crore in interest expenses.
While the dues for the 2014 auction have been settled, Airtel has an additional
Rs 74,500 crore payments due for spectrum acquired through various auctions between 2012 and 2021. For spectrum acquired in 2021, the payments need to be completed by 2038-39.