**Airtel Explores Equity Conversion of Revenue Dues Amid Industry Challenges**
Bharti Airtel Ltd’s recent proposal to the government regarding the conversion of its revenue-linked dues into equity was primarily aimed at assessing the availability of such an option, according to Vice Chairman and Managing Director Gopal Vittal. During a conference call on Wednesday, Vittal emphasized that the final decision would rest with the company’s board, pending clarification from the government. “We sought a non-discriminatory level playing field regarding the option to convert,” he stated. “The decision to convert or not will be made by the board after we receive clarification from the government.”
In the same call, Vittal discussed various strategic initiatives, including the removal of subsidies on direct-to-home (DTH) set-top boxes, plans for satellite communications in collaboration with Starlink, and efforts to expand the enterprise business. He reiterated the need for restructuring mobile tariffs to enhance the financial health of the telecom sector.
Last month, Airtel approached the Department of Telecommunications (DoT) to convert its adjusted gross revenue (AGR) dues, estimated at around ₹40,000 crore, into equity. This move could potentially grant the government a 3-4% stake in India’s second-largest telecom operator. Airtel’s request followed the government’s recent decision to convert Vodafone Idea Ltd’s spectrum dues of ₹36,950 crore into equity, which is currently under review by the Department of Investment and Public Asset Management. This marks the second instance of equity conversion for Vodafone Idea, which previously had interest dues of ₹16,133 crore converted into equity in 2023, resulting in the government holding a 49% stake in the company.
As part of the telecom relief package introduced in September 2021, the government allowed a four-year deferment for telecom operators to pay their AGR-related dues, recognizing the financial strain on the sector. Operators were given the option to convert these dues into equity at the end of the moratorium period, contingent on government approval.
Mahesh Uppal, director at ComFirst, a telecom consultancy, commented on the situation, stating, “It is reasonable to advocate for a level playing field in the payment of regulatory dues. However, I question whether the conversion option is particularly appealing for companies like Airtel or Jio, which do not face the same funding challenges as Vodafone Idea.”
In a strategic move to enhance cash flow in its DTH business, Bharti Airtel has decided to eliminate subsidies on consumer set-top boxes. This decision comes in response to competitive pressures from state-owned Prasar Bharati’s DD Free Dish service, as well as pricing and cross-holding restrictions within the industry. Vittal described this decision as a “brave call,” expressing hope that competitors would follow suit. “We believe it is illogical to maintain subsidies in a market where the only benefit is to retain existing customers,” he remarked.
In conclusion, Bharti Airtel’s exploration of converting its revenue dues into equity reflects its strategic approach to navigating the challenges within the telecom sector. As the company awaits government clarification, its decisions regarding subsidies and tariff restructuring will play a crucial role in shaping its future trajectory.
**FAQ**
**Q: What is Bharti Airtel’s proposal to the government regarding its dues?**
A: Bharti Airtel has proposed converting its revenue-linked dues into equity to explore available options, with a final decision pending government clarification.