Airtel Seeks Dues-to-Equity Conversion to Secure Level Playing Field

Airtel Requests Equity Conversion of Statutory Dues, Seeks a Level-Playing Field

Bharti Airtel has officially approached the Department of Telecommunications (DoT), requesting the conversion of its deferred government dues into equity. This move is in line with the 2021 telecom reforms package and aims to ensure a level-playing field in the application of the equity conversion clause. Airtel’s formal request comes in the wake of the government increasing its stake in Vodafone Idea to over 49%.

The government has confirmed Airtel’s request, stating that all companies can apply under the reforms package. However, the government will evaluate each application carefully and make decisions on equity conversions on a case-by-case basis.

Highlights

• Airtel seeks equity conversion of deferred dues as per 2021 telecom reforms

• Request follows the government’s stake increase in Vodafone Idea to 49%

• Government will assess each equity conversion demand individually

Airtel’s Debt Reduction Strategy: Prepayments and Financial Flexibility

Airtel has been actively working on reducing its debt burden. In the past month, the company made a significant prepayment of ₹5,985 crore ($698.33 million) to the government, fully clearing its high-cost spectrum liabilities from the 2024 spectrum auctions. This latest prepayment brings Airtel’s total spectrum-related debt down to ₹52,000 crore (approximately $6.27 billion), with the cost of debt reduced to 7.22%.

As of now, Airtel has prepaid ₹25,981 crore of high-cost spectrum liabilities for the fiscal year 2025, and cumulatively ₹66,665 crore of spectrum liabilities have been cleared. These prepayments have been made well ahead of their original due dates, reducing the interest burden significantly.

Highlights

• Airtel has prepaid ₹66,665 crore in spectrum liabilities

• Latest prepayment reduces spectrum debt to ₹52,000 crore

• Prepayments made approximately 7 years ahead of their original maturities

The 2021 Telecom Reform Package and Its Implications for Airtel

The telecom reform package introduced in September 2021 allowed telecom operators to defer their spectrum and AGR (Adjusted Gross Revenue) dues for a period of four years. Additionally, it provided the option for operators to convert the interest on deferred payments into equity.

The moratorium on spectrum dues will end in September 2025, and for AGR dues, it will end by March-April 2026. Repayments for these dues will begin in 2026 and continue until 2031, with 10% of the amount due to be repaid by March 31 of each year.

Highlights

• Telecom reform package allows deferred payments and equity conversion

• Moratorium ends for spectrum dues in September 2025, AGR dues by March–April 2026

• Repayments to commence in 2026, continue until 2031

Vodafone Idea’s Equity Conversion and Government’s Stake Increase

Vodafone Idea, which had also availed itself of the telecom moratorium, has already opted for the equity conversion option. As a result, the government’s stake in Vodafone Idea increased from 22.6% to approximately 49% following the conversion of ₹36,950 crore of outstanding spectrum dues into equity shares.

Despite this, Communications Minister Jyotiraditya Scindia recently stated that the government has no plans to convert any further Vodafone Idea dues into equity. Such an action, according to the minister, would turn the company into a public sector unit (PSU), and therefore, no additional equity conversion is anticipated. The remaining statutory dues of Vodafone Idea, including AGR and spectrum-related payments, are now solely the company’s responsibility.

Highlights

• Vodafone Idea’s government stake increased to 49% after equity conversion

• No plans for further equity conversion in Vodafone Idea, says Minister Scindia

• Vodafone Idea’s remaining dues now its own responsibility