The other option offered in the Department of Telecom's notification would be considered by the company within the stipulated timelines, Airtel said in a regulatory filing.
"...we wish to inform you that the company has confirmed to avail the following options...deferment of the payment of spectrum auction instalments due up to four years; and deferment of AGR related dues by a period of four years with immediate effect," Airtel said in the BSE filing.
Sources said Airtel had communicated its decision to the telecom department on Friday.
On the option for converting the interest amount (of moratorium period) into equity, companies still have ample time to convey their decision, a source pointed out.
In line with the bold reforms unveiled for the telecom sector, the government recently wrote to telcos including Bharti Airtel, Vodafone Idea and Reliance Jio asking them to convey by October 29 if they would be opting for the four-year dues moratorium.
Telcos have also been given 90 days time to indicate if they want to opt for converting the interest amount pertaining to the moratorium period into equity.
Bharti Airtel Chairman Sunil Mittal had last month said the company will opt for payment moratorium and redirect the cashflow to aggressively build networks.
With regard to interest dues on payment moratorium, Mittal had said Airtel will take a decision, when the offer comes from the government, on whether to go for equity conversion mechanism or pay cash.
The company's board will take a decision at that point, Mittal had said adding that with interest component working out to Rs 7,500- 10,000 crore, the stake involved may work out to 2-3 per cent, in case the company opted for it.
The moratorium will free up cashflow to the extent of Rs 40,000 crore and that amount is sufficient to meet the market's requirements, he had said.
Vodafone Idea, last week, said it will avail the four-year spectrum payment moratorium. VIL had further stated that other options offered in the telecom department's notification will be considered by the board of directors within the set timeframe.
According to the letter sent to the telcos, the government has offered the option to defer payment of the spectrum auction instalments due up to four years, with immediate effect, excluding the instalments due for spectrum auction 2021. This option is applicable from FY 2022-23 to FY 2025-26.
These deferred amounts will be spread equally over the remaining instalments to be paid, without any increase in the existing time period specified for making the instalment payments.
Interest as stipulated in the relevant year of auction of spectrum will, however, be charged so that the Net Present Value (NPV) of the payable amount is protected.
"Option for converting the interest amount, arising out of protection of NPV on account of deferred spectrum dues, pertaining to the moratorium period, by way of equity, shall be exercised within 90 days of this notification," the DoT letter to telcos had said.
The letter had also spelt out the fine print related to modalities for converting interest amount into equity.
The method of arriving at the price and valuation for equity conversion of interest dues is different for listed and unlisted companies.
One of the letters issued by DoT to a listed company had mentioned that equity shares would be issued by the company to the government on preferential basis. It went on to add that the NPV of the interest amount will be calculated as on the date of exercise of option.
The interest amount will continue to be treated as a loan to companies till the completion of the equity infusion process, DoT had said.
Besides the four-year break to companies from paying statutory dues, the relief package for the sector includes permission to share scarce airwaves, change in the definition of revenue on which levies are paid and 100 per cent foreign investment through the automatic route.
The measures, aimed at providing relief to companies such as Vodafone Idea that have to pay thousands of crores in unprovisioned past statutory dues, also include the scrapping of Spectrum Usage Charge (SUC) for airwaves acquired in future spectrum auctions.
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