Airtel’s Strategic Move: Seeking Equity Conversion for Government Dues

Bharti Airtel has approached the Department of Telecommunications (DoT) to convert its government dues into equity under the telecom reforms package of 2021. This request follows a similar move by Vodafone Idea, which resulted in the government acquiring a significant stake in the company. Airtel’s demand highlights the need for a level-playing field in the telecom sector, especially as the industry grapples with financial challenges stemming from adjusted gross revenue (AGR) dues and intense competition since Reliance Jio’s entry in 2016.

The telecom industry has faced significant financial strain, with AGR dues amounting to ₹1.47 lakh crore, including penalties and interest. In response, the government introduced a bailout plan in 2021, offering a four-year moratorium on statutory dues. While Vodafone Idea opted for equity conversion, Airtel had not pursued this option until now. The moratorium period is set to end in 2025 for spectrum dues and 2026 for AGR dues, after which deferred payments will commence.

Airtel’s move underscores the ongoing challenges in the telecom sector and the importance of equitable reforms to ensure sustainability and growth. By seeking equity conversion, Airtel aims to align with industry practices and strengthen its financial position amidst evolving regulatory and competitive landscapes.