New Delhi: Bharti Airtel has informed the government that it will opt for a moratorium of four years on payment of AGR and spectrum dues, a source said.
The option of moratorium due to telecom companies was offered by the government as part of the recently announced relief package for the telecom sector.
The source said Airtel on Friday conveyed its decision to the DoT.
The source said Airtel has told the government that it will take a moratorium of four years on AGR (Adjusted Gross Revenue) and spectrum dues as per NIA (Notice Inviting Application) norms with the option of prepayment.
The source said that on the option of converting the interest amount (moratorium period) into equity, the companies still have enough time to convey their decision.
An e-mail sent to Bharti Airtel on the matter did not elicit any response.
In line with bold reforms for the telecom sector, the government recently wrote to telcos including Bharti Airtel, Vodafone Idea and Reliance Jio asking them to state by October 29 whether they would opt for the four-year moratorium. .
The telco has been given 90 days to state whether they wish to opt for converting the interest amount into equity relating to the moratorium period.
Bharti Airtel chairman Sunil Mittal said last month that the company would opt for a payment moratorium and aggressively redirect cash flows to network.
With regard to interest arrears on deferment of payment, Mittal had said that Airtel would decide when there is a proposal from the government whether to go for equity conversion mechanism or pay cash.
The company’s board will take a decision at that time, Mittal had said, adding that with an interest component of Rs 7,500- 10,000 crore, the stake involved could work out to 2-3 per cent, if the company so chose.
He had said the moratorium would free up cash flow of Rs 40,000 crore and this amount is sufficient to meet the market needs.
Vodafone Idea last week said that its board has approved the benefit of the four-year spectrum payment moratorium.
VIL had further said that other options introduced in the DoT notification would be considered by the Board of Directors within the time frame prescribed.
According to a letter sent to telcos, the government has offered an option to defer the payment of spectrum auction installments for up to four years, with immediate effect, except the installments due for spectrum auction 2021. This option is applicable from FY 2022- 23 to FY 2025-26.
These deferred amounts will be distributed equally among the remaining installments to be paid, without any increase in the existing time period specified for making installment payments.
However, fixed interest will be charged in the respective year of auction of spectrum so as to protect the Net Present Value (NPV) of the amount payable.
“The interest amount on account of deferred spectrum arrears arising out of protection of NPV, relating to the moratorium period, by way of equity, shall be utilized within 90 days of this notification,” the letter to DoT said. .
The DoT’s letter had also spelled out the fine print related to deferment of deferred spectrum auction installments and AGR dues as well as modalities for converting interest amount into equity.
The method of arriving at the value and valuation for equity conversion of interest payable amount differs for listed and unlisted companies.
In one of the letters issued by DoT to a listed company, it was mentioned that equity shares would be issued by the company to the government on a preferential basis. It was added that the NPV of the interest amount would be calculated as on the date of exercise of the option.
DoT had said that the interest amount will continue to be treated as loan to companies till the equity investment process is completed.
The government recently approved a blockbuster relief package for the sector which includes, apart from a four-year break from paying statutory dues for companies, permission to share rare airwaves, change in the definition of revenue on which the levy is levied. Payment is made and 100% foreign investment is involved. automatic route.
It also aims to provide relief to companies like Vodafone Idea, which have to pay thousands of crores in unorganized past statutory dues, including waiving of spectrum usage charges (SUC) for airwaves received in future spectrum auctions.
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