Government to decide on buying equity shares from Airtel

The government’s telecom reforms have led to an unviable situation with Airtel asking that AGR dues be converted into equity. Analysts said if the government concedes, it will further open the floodgates for other players like Reliance Jio to come up with the same demand in the future.

While the telecom reforms policy of 2021 allows interest liability related to spectrum and AGR dues to be paid through equity, the government has now allowed telecom operators to opt for conversion of even principle amount for spectrum auction held before 2021 and AGR dues.

Sources in the government said that converting of spectrum and AGR dues is included in 2021 reforms package. However, conversion is not automatic and a telecom operator has to apply and go through a process of scrutiny.

“It needs to be evaluated and scrutinised before any final decision is made,” the source said.

Airtel has a total of over ₹93,000 of dues, including ₹41,000 crore in AGR dues and ₹52,000 crore in spectrum dues.

The Sunil Mittal-run company recently sought conversion of its AGR dues of around ₹41,000 crore, including interest liability, into equity in line with the relief given to debt-ridden Vodafone-Idea by the government.

Sources in Department of Telecommunications (DoT) said the conversion of ₹41,000-crore of AGR dues into equity will go through several rounds of scrutiny.

If Airtel’s request is approved, the government could gain a significant stake in the company, potentially leading to a situation where it becomes a stakeholder in multiple telecom operators. The government may consider the broader implications of such a move on the telecom industry’s financial stability and competitive landscape. 

“These things have to be considered very carefully. The policy implications are big and it is not clear what the future course will be,” sources said.

The process was triggered in March when the government gave relief to Vodafone-Idea by converting its dues worth ₹53,000 crore into equity ownership in the company. Through this, the government increased its stake in Vodafone-Idea to 48.99 per cent from 22.6 per cent earlier, by converting dues worth ₹36,950 crore.

Earlier, the government had converted the company’s debt of about ₹16,130 crore, comprising interest arising from deferment of AGR and spectrum instalments, into equity in February 2023.

Meanwhile, Airtel has cleared all its dues for the spectrum that it purchased before 2021 auction. It has purchased spectrum worth ₹68,598 crore in auctions that were held in 2021, 2022 and 2024, and the dues are eligible for conversion into equity.

Shares of Airtel closed at ₹1,815.60 apiece on the BSE on Friday, down 1.58 per cent from the previous close.

Published on April 25, 2025