Bharti Airtel has opted for a four-year moratorium on adjusted gross revenue (AGR)-related dues for FY18 and FY19 amounting to about Rs 3,000 crore, a senior company official said.
However, the Sunil Mittal-led telco has decided not to exercise the option to convert accrued interest on such regulatory contributions into government equity, the official added.
“Airtel has informed DoT that it will exercise the option to defer its AGR-related rights (for FY18 and FY19) for a period of four years, but not opt for the stock conversion,” a company executive told ET.
The Department of Telecommunications (DoT) had recently offered the two options to all telcos in addition to the industry support package announced last September.
Airtel’s decision comes just under a week after Vodafone Idea (Vi) 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 commencing March 31, 2026. .
However, the moratorium offer does not apply to Reliance Jio, which has no outstanding AGR rights for the period.
The continued deferral of AGR payments will boost Airtel’s cash flows and help it participate more strongly in the pending sale of 5G airwaves, which starts on July 26.
IIFL estimates that Airtel could spend approximately Rs 25,000 crore on 5G spectrum sales, 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 areas. markets.
Analysts also expect Airtel to purchase about 500 units of low-cost 26Ghz airwaves that are ideal for high-speed, low-latency 5G applications, especially in high-traffic zones where large volumes of traffic need to be carried.
The government had already allowed telcos to defer AGR rights by four years until FY17. Vi and Airtel have said they will defer this dues, but only the former had agreed to convert the accrued interest into equity, giving the government a 33% stake in Vi. Telcos pay license fees and spectrum usage charges to the government based on AGR.
In similar letters dated June 15, DoT had asked all three private telcos to make a decision within 15 days about deferring AGR payments.
Airtel shares closed at Rs 684.40 on Thursday, down 0.5% on the BSE.
The company had AGR rights worth Rs 43,000 crore as of FY17. It has already paid Rs 18,004 crore of this.
As of last December, Airtel had prepaid Rs 15,519 crore to DoT, which settled all dues related to ether purchased in the 2014 sale. Then, in March of this year, it prepaid Rs 8,815 crore to the department, offsetting a significant portion of the ether dues purchased at the 2015 auction. Those measures were designed to cut interest costs and increase cash flows as 4G coverage ramped up.