Finance Ministry cold to Bharti Airtel plea on dues-to-equity switch

The Union finance ministry is not keen on considering Bharti Airtel’s request for converting its ₹41,000 crore adjusted gross revenue (AGR) dues into government equity, it is learnt.

 

“They (Airtel) had approached us. But we told them to follow the legal process on their AGR dues. In the case of Vodafone, the spectrum payment dues were converted into equity,” a senior government official told Business Standard. 

 

If Airtel’s request is accepted, the government would have 2 to 4 per cent equity in the telco.

 

Email queries sent to the finance ministry and Airtel remained unanswered till the time of going to the press.

 

Vodafone Idea had earlier opted for the government’s telecom reform package approved in 2021. Under that moratorium scheme, the government had picked up a stake in Vodafone Idea in 2022 after converting its spectrum dues worth ₹53,000 crore. The government recently increased its stake in the financially stressed telecom company to 48.99 per cent by converting some of its dues again. 

 

Bharti Airtel’s application for converting its AGR dues to the government into equity ownership was meant to seek clarity on available options for the company, the telecom firm’s vice-chairman and managing director, Gopal Vittal, said earlier this month during a post-earnings analyst call.

 

“We just wanted a non-discriminatory level playing field in terms of an option to convert. Whether we will convert or not is a decision for the board to take, but the option is something that we wanted to make sure. We wanted a clarification from the government whether we had the option or not,” Vittal had said.

 

Airtel’s request for equity conversion last month had surprised industry watchers as the telco had not taken the government’s moratorium offer earlier, and last month it prepaid an additional ₹5,985 crore of dues to the Department of Telecommunications (DoT) for spectrum acquired in the 2024 auction. In fact, the telco had prepaid all its spectrum dues that had interest costs higher than 8.65 per cent. The spectrum liabilities were prepaid nearly seven years ahead of their average residual maturities, reducing Airtel’s exposure to costlier debt, the telco had said in a statement. 

 

As part of the telecom reforms package approved by the Cabinet in September 2021, the government had allowed a four-year deferment on annual payments of dues arising out of the 2019 AGR judgement of the Supreme Court. Scheduled annual payment of dues for spectrum purchased in past auctions was also deferred for four years. It also allowed financially stressed telcos the option to convert a part of their statutory dues owed to the government into equity.

 

The Supreme Court last week dismissed the petitions moved by Vodafone Idea, Bharti Airtel, and Tata Teleservices seeking a waiver on their longstanding AGR dues. The telcos were seeking relief related to payment of interest, penalty, and interest on penalty components as part of their AGR dues. 

 

Calling the plea “misconceived”, a Bench of Justices J B Pardiwala and R Mahadevan had said if the Centre decided to extend relief to these companies, the court would not obstruct such a move. “If the government wants to help you, we are not coming in the way,” Pardiwala had said.

 

The apex court had in February rejected a series of review petitions from telecom operators challenging its 2021 decision. In 2021, the court had upheld the DoT’s calculation of AGR dues and disallowed any rectification of alleged arithmetical errors.