Bharti Airtel is seeking a non-discriminatory level playing field to ensure it has the option to convert its adjusted gross revenue (AGR) dues into government equity, Vice Chairman and Managing Director Gopal Vittal said, emphasising that the move is merely an exploration of whether such an option exists.
In a bid to strengthen its financials further, the telco is eliminating subsidies on set-top boxes, part of a structural shift aimed at improving cash flows.
The Sunil Mittal-led company recently wrote to the Department of Telecommunications (DoT), requesting that over Rs 41,000 crore of AGR dues be converted into government equity.
“We think that we just wanted a non-discriminatory level-playing field in terms of an option to convert… whether we will convert or not is a decision for the board to take. But the option is something that we wanted to make sure that we wanted a clarification of the government, whether we had the option or not,” Vittal told analysts during the Q4 earnings call on May 14.
In its communication to the DoT, Airtel also flagged the high debt burden of its promoter entity, Bharti Telecom (BTL), and emphasised the need to strengthen its balance sheet to enable greater investments in infrastructure and emerging technologies.
The company carries a total debt of Rs 1.77 lakh crore, a substantial portion comprising AGR-related dues.
Airtel’s proposal came quickly after the government converted Vodafone Idea Ltd’s (Vi) Rs 36,950 crore worth of spectrum dues into equity, which raised the government's stake to 49%.
In a significant strategic shift, the company said it is making structural changes to its DTH business by completely removing subsidies on set-top boxes.
“...the subsidies and all of the cost of acquisition that's built into high sort of subsidies on the boxes that were sold needs to be stripped out. We have taken a brave call and we've done it. We're waiting for the competition to follow… we believe this will dramatically impact our cash flows,” Vittal said.
“And we hope sense will prevail to strip those subsidies out because there's no point putting in subsidies in a market where the only subsidy will rotate your own customer,” he added.
"There'll probably be 150 million, 160 million TV homes. We are potentially talking over the next five years of broadband homes getting to maybe 75 million to 80 million. So there will still be a large pool of homes served for linear broadcast television, which is where DTH will play a role. And there's still an opportunity to grow from cable," Vittal said.
He explained that the rise of IPTV and broadband-enabled connected boxes is adding pressure on the traditional DTH model.
“So, the DTH business or the DTH regulation has sort of price that is fixed, it has certain crossholding restrictions where the content player can't have also sort of investments in the distribution pipe, the cable has a slightly different set of restrictions, and when it comes to broadband, it's absolutely free for all, there are no regulations whatsoever. So, this is the reason that's been actually creating the challenge,” he said.
Vittal added that the growth of free services like Doordarshan’s Free Dish presents another challenge for the DTH segment.
“So, these are some of the other headwinds that the industry is facing. I think there will still be an opportunity for DTH, because home broadband will not get to every single home in India. I mean, there are 260 million-270 million homes,” he said.
In the January-March quarter, Airtel’s revenue from its Digital TV services business, which houses its DTH operations, was marginally down year-on-year to Rs 764 crore. The company’s subscriber base fell 1.5% on-year to 15.9 million.
Vittal reiterated that India's telecom tariffs remain among the lowest globally and urgently need revision.
“We've also said that the current telecom tariff structure in India is broken with a one-size-fits-all pricing model, which is not appropriate for upgradation, nor is it in line with any other market.
Restructuring the tariff architecture is essential to improve the industry's financial health and sustain future investments,” he said.
He added that tariff restructuring could involve reducing data allowances on select plans and charging more to users who can afford higher rates.
During the March quarter, Airtel reported a flat growth sequentially in average revenue per user (Arpu) at Rs 245. “Remember it (Arpu) was impacted by two less days in the quarter. Arpu stood at Rs 248 on an equal day basis,” Vittal said.
Airtel is currently focused on expanding its postpaid subscriber base to drive ARPU growth. In Q4FY25, the telco added 0.6 million net postpaid subscribers, totalling 25.9 million.
“Smartphone upgrades is a second area of focus, and driving penetration of international roaming is a third area of focus,” he added. “We closed the quarter with 135 million 5G customers. 5G devices now represent 85% of the total smartphone shipments, and we continue to capture our fair share of the 5G device market.”
Vittal noted that the rural network rollout had played a key role in Airtel’s market share gains, though the pace of rural expansion is expected to slow.
“There are a few more areas, particularly in some of our challenger circles, where our coverage is low. For example, in MP, Maharashtra, and Gujarat, we will continue to do a little radio rollout there,” said Soumen Ray, CFO of Bharti Airtel.
In the March quarter, Bharti Airtel signed an agreement with Elon Musk's SpaceX to offer Starlink satellite internet services in India.
“Starlink will complement and enhance Airtel’s existing offerings by delivering widespread connectivity across the country,” said Vittal. He noted that the high-speed satellite internet service would be especially valuable in areas lacking access to traditional terrestrial networks.
Looking ahead, Airtel plans to launch its sovereign cloud platform in June, Vittal announced. The company is also ramping up investments in data centers to meet rising demand.
Vittal cited the fast-evolving nature of chipset technology to avoid offering GPU-as-a-service. “We don’t want to be early movers in this space—we’d rather be fast followers. At some point, we may revisit this,” he said.
Airtel expects capital expenditure for the current fiscal year to be lower than the Rs 42,290 crore spent in FY 2024–25. “Capex will trend downward, mainly due to a slowdown in rural network expansion,” Vittal noted.
In its home broadband segment, which includes fixed wireless access, Airtel added 812,000 customers, pushing its total base past 10 million as of March. Fixed wireless access accounted for 40–45% of the net additions.
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