November 29, 2022

Bharti Airtel has opted for the four-year moratorium on adjusted gross revenue (AGR) related dues for FY18 and FY19 amounting to around Rs 3,000 crore, a senior company official said.

The Sunil Mittal-led telco, though, has decided against availing the option to convert accrued interest on such statutory dues into government equity, the official added.

“Airtel has informed DoT that it will exercise the option of deferring its AGR related dues (for FY18 and FY19) by a period of four years but not opt for the equity conversion,” a company executive told ET.

The Department of Telecommunications (DoT) had recently offered the two options to all telcos in addition to its support package for the industry announced last September.

Airtel’s decision comes just under a week after Vodafone Idea (Vi) had opted for the moratorium and decided to pay its AGR-related dues of Rs 8,837 crore for FY18 and FY19 in six equal annual installments, starting March 31, 2026.

The moratorium offer, though, doesn’t apply to Reliance Jio, which doesn’t have any pending AGR dues for the period.

The continuing AGR payments deferral will boost Airtel’s cash flows and help it participate more strongly in the upcoming 5G airwaves sale, starting July 26.

IIFL estimates Airtel could spend around Rs 25,000 crore in the 5G spectrum sale, primarily to bolster its sub-1 Ghz spectrum holdings while making selective purchases of the more expensive 3.3-3.67 Ghz 5G band in urban markets.

Analysts also expect Airtel to buy around 500 units of low-priced 26 Ghz airwaves that are ideal for high-speed, low-latency 5G applications, especially in crowded zones where large volumes of traffic have to be carried.

The government had already allowed telcos to defer AGR dues up to FY17 by four years. Vi and Airtel have said they will defer those dues but only the former had agreed to convert the accrued interest into equity that will see the government holding a 33% stake in Vi. Telcos pay licence fees and spectrum usage charges to the government on the basis of AGR.

In similar letters dated June 15, DoT had asked all three private telcos to take a decision on deferring AGR payments within 15 days.

Airtel shares closed at Rs 684.40, down 0.5% on the BSE on Thursday.

The company had AGR dues worth Rs 43,000 crore as of FY17. It has already paid Rs 18,004 crore of this.

Last December, Airtel had prepaid Rs 15,519 crore to DoT, clearing all dues relating to airwaves bought in the 2014 sale. Subsequently, in March this year it prepaid Rs 8,815 crore to the department, clearing a sizable chunk of dues relating to airwaves bought in the 2015 auction. Those moves were aimed to ring in interest cost savings and boost cash flows as it ramped up 4G coverage.

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