Airtel seeks equity conversion of statutory dues, wants a level-playing field

Airtel seeks equity conversion of statutory dues, wants a level-playing field

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26 Aug, 2025 12:21

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Bharti Airtel has formally approached the Department of Telecommunications (DoT), seeking conversion of its deferred government dues into equity under the 2021 telecom reforms package, government sources told Moneycontrol. With its latest communication to the DoT, Airtel is pressing for a level-playing field in the application of the equity conversion clause.

The telco’s move comes in the wake of the government raising its stake in Vodafone Idea to over 49%.

“All companies can apply as per the reforms package. The government will take a decision after properly evaluating the demand, and any new equity conversion will be decided on a case-by-case basis,” a government source said, confirming Airtel’s request.

A query sent to Airtel didn't elicit any response.

Airtel, last month, prepaid Rs 5,985 crore ($698.33 million) to the government, fully clearing "high-cost" liabilities from the 2024 spectrum auctions. The latest payment has reduced Airtel's debt related to spectrum to Rs 52,000 crore, or approximately $6.27 billion, bringing down the cost of debt to 7.22%.

Airtel has so far prepaid Rs 25,981 crore of high-cost spectrum liabilities for the current fiscal year 2025 and has cumulatively prepaid spectrum liabilities of Rs 66,665 crore as of the date. The average interest rate on the cumulative liabilities prepaid was approximately 9.74%. Airtel had earlier fully prepaid liabilities with interest rates of 10%, 9.75%, and 9.3%. These prepayments were made approximately 7 years ahead of their average residual maturities.

The prepayments have resulted in Airtel clearing Rs 1,16,405 crore of scheduled instalments that would have otherwise been payable on their respective dates over the original tenure of the liabilities.

If approved, Airtel’s move could significantly reduce its debt burden and provide greater financial flexibility amid intensifying competition and ongoing 5G investments.

The telecom reform package announced in September 2021 allowed telcos to defer spectrum and AGR (Adjusted Gross Revenue) dues for four years. It also provided the option to convert interest on these deferred payments into equity, should the operator choose to do so.

The moratorium is set to end in September 2025 for spectrum dues and by March–April 2026 for AGR dues. Repayments will commence in 2026 and continue until 2031, with 10% of the amount due to be paid by March 31 of each year.

Both Vodafone Idea and Airtel had availed themselves of the moratorium, but until now, only Vodafone Idea had opted for equity conversion, resulting in the government's substantial equity stake in the struggling operator.

The government on March 30 converted its outstanding spectrum auction dues into equity shares worth Rs 36,950 crore, increasing its stake in Vodafone Idea from 22.6 percent to approximately 49 percent.

Communications Minister Jyotiraditya Scindia, earlier this week, told The Economic Times that the government has no plans to convert any more of Vodafone Idea's statutory dues into equity, as such a move will convert it into a public sector unit (PSU). The remaining dues, adjusted gross revenue (AGR) and spectrum-related payments, are now the company’s responsibility.