Bharti Airtel, the second largest telecommunications operator in the country, has chosen to postpone the additional adjusted gross revenue (AGR) fees until FY2018-19. It is noteworthy that Vodafone Idea (Vi) did the same. Earlier, the Department of Telecommunications (DoT) offered telecommunications companies an option to defer the payment of AGR-related fees until FY2016-17, as determined by the Supreme Court (SC). To provide further relief to the operators, the DoT wrote to the telcos on 15 June whether they would like to defer further AGR-related fees until FY2018-19 with a period of four years.
Vodafone Idea, a few days back, agreed to the same. As the telecommunications services only had 15 days to communicate their decision, on 30 June 2022 Airtel agreed to defer the additional fees for a period of four years as well.
Airtel announced the same via a listing on the Bombay Stock Exchange (BSE). However, the telco did not mention the amount of the deferred fees. Regardless, it puts Airtel in a better position for the upcoming 5G investments and 4G expansion.
In addition to deferring fees, DoT Airtel has offered an option to convert its accrued interest costs into equity for the government. Airtel chose not to do so, which makes a lot of sense.
Bharti Airtel has the right to pay the deferred membership fee in advance
While Airtel communicated his decision to the stock exchanges, Airtel said he has the right to pay the deferred membership fees in advance whenever he wants. The deferred fee is for four years, applicable from FY2021-22 to FY2024-25.
Airtel has already managed to make a lot of free cash flow, and the company has only opted for deferral to ensure it has more liquid funds to stimulate investment and growth. Both Airtel and Vi are now in a much better position due to the decision of the DoT to help them with their liquidity levels. Jio, as expected, did not opt for such a postponement.
