Airtel awaiting govt response on AGR relief, expects fair treatment: MD Gopal Vittal

Bharti Airtel is looking to step up dividend payouts in the coming years as its debt levels ease and free cash flow generation strengthens

Bharti Airtel is awaiting the government’s response to its request for parity in adjusted gross revenue (AGR) relief, Managing Director Gopal Vittal said, adding that the company is prepared to meet its payment obligations regardless of the government’s decision.

“We have written to the government to be extended the same relief as any other telco… we will abide by whatever decision they take,” Vittal said during the company’s Q1 post-earnings call, referring to the Department of Telecommunications’ recent relief measures for Vodafone Idea. "To that extent, I would say that we have the room to make whatever payments are required."

Airtel, in May this year, urged the Department of Telecommunications (DoT) to convert its AGR (adjusted gross revenue) dues of about Rs 40,000 crore into equity, which would give the government a 3-4% stake in India’s second-largest telecom operator. Airtel's request came after the government recently converted Vodafone Idea Ltd’s (Vi) Rs 36,950 crore worth of spectrum dues into equity.

As part of the telecom relief package announced in September 2021, the government allowed a four-year deferment for paying dues linked to the AGR of telecom operators as the sector was grappling with a heavy financial burden. The operators could convert the dues into equity at the end of the moratorium period at the option of the government.

On the broader issue of mobile tariffs, Vittal flagged that India’s average revenue per user (ARPU) and data rates per GB remain among the lowest globally, even compared to countries with lower per capita income. He attributed this to a flawed pricing architecture that bundles generous data and voice allowances even in entry-level plans, leaving no incentive for users to upgrade.

“If there was a more sensible architecture, like in Indonesia, we would already be at a much higher ARPU, without hurting affordability for low-end users,” Vittal said, adding, “The real issue is that people who can afford to pay are paying less, while the poor don’t need to be charged more.”

The remarks come amid industry-wide calls for tariff correction to make telecom business models more sustainable, especially in the face of rising capex for 5G rollouts and digital infrastructure.

Bharti Airtel is looking to step up dividend payouts in the coming years as its debt levels ease and free cash flow generation strengthens, even as it actively scouts for growth opportunities in adjacent segments like cloud, cybersecurity, and data centres.

"Given the improving debt position and strong free cash flow generation, our balance sheet continues to strengthen. We've consistently said that as leverage comes down, dividend payouts will rise, and that trend is already visible. At the same time, we're actively exploring growth opportunities in adjacent areas like cloud, security, and data centres. While there's nothing concrete to announce yet, work is underway behind the scenes to identify and pursue these opportunities," he said.