After Vodafone Idea, Airtel eyes equity route for statutory dues: Report

Bharti Airtel has approached the Department of Telecommunications (DoT) seeking conversion of its statutory dues into equity under the Centre's 2021 telecom reforms package, reported The Economic Times on Thursday.

Airtel reportedly wants a level playing field in the industry, especially after the government raised its stake in Vodafone Idea (VIL) to 48.99% by converting ₹36,950 crore worth of adjusted gross revenue (AGR) dues into equity.

The development comes at a time when the government has paused a proposal to waive 50% of the interest and penalties on AGR dues, a step that could have offered some relief to telecom operators.

The government became the single largest shareholder in Vodafone Idea, surpassing the combined stake of the company’s promoters, Vodafone Group and Aditya Birla Group, whose holdings have now declined to 16.1% and 9.4% respectively.

Despite the dilution, Vi said the promoters would retain operational control of the company.

Any additional stake could potentially turn the company into a public sector undertaking (PSU), bringing it under the administrative control of the government, which would then get to appoint the board.

However, Communications Minister Jyotiraditya Scindia on Wednesday clarified that the government has no plans to increase its shareholding in Vodafone Idea (VIL) as it does not want the telecom operator to turn into a PSU.

The telecom sector has faced severe financial stress since the Supreme Court, in October 2019, upheld the government's interpretation of AGR, resulting in dues of over ₹1.47 lakh crore across the industry. These comprised ₹92,642 crore in licence fees and ₹55,054 crore in spectrum usage charges, with nearly 75% of the total amount accruing from interest, penalties, and interest on penalties.

Under the September 2021 relief package, the Centre offered a four-year moratorium on AGR and spectrum dues, which ends in 2025 for spectrum dues and in early 2026 for AGR dues. After the moratorium, telecom companies will have to pay 10% of the deferred dues by March 31 each year, with the repayment cycle stretching until 2031.

While Airtel had earlier availed of the moratorium, it had refrained from opting for the equity conversion route until now, unlike Vodafone Idea.