Airtel Accepts 4-Year Moratorium on Spectrum and AGR Payments | Economic news
New Delhi: Bharti Airtel on Monday announced it would opt for a four-year moratorium on payments – on AGR and spectrum fees – proposed by the government as part of a back-up plan for the telecommunications sector.
The other option proposed in the Telecommunications Department’s notification would be considered by the company within the allotted timeframe, Airtel said in a regulatory filing.
“… we wish to inform you that the company has confirmed that it avails itself of the following options … deferral of payment of spectrum auction installments due for up to four years; and deferral of contributions related to the ‘AGR for a period of four years with effect,’ Airtel said in the BSE file.
Sources said Airtel communicated its decision to the telecommunications department on Friday.
On the possibility of converting the amount of interest (from the moratorium period) into equity, companies still have plenty of time to make their decision known, a source said.
In line with bold reforms unveiled for the telecommunications sector, the government recently wrote to telecommunications operators, including Bharti Airtel, Vodafone Idea and Reliance Jio, asking them to let them know by October 29 if they opted for the moratorium. four-year contributions.
Telecom operators also have 90 days to indicate whether they wish to opt for the conversion of the amount of interest relating to the moratorium period, into equity.
Bharti Airtel chairman Sunil Mittal said last month the company would opt for a moratorium on payments and redirect cash flow to aggressively build networks.
Regarding the moratorium on interest on payments, Mittal had said Airtel would make a decision, when the offer came from the government, on whether to opt for a stock conversion mechanism or pay in cash. .
The board of directors of the company will make a decision at that time, Mittal said, adding that with an interest component amounting to Rs 7,500 to 10,000 crore, the stake at stake could reach 2 to 3%, in case the company chooses.
The moratorium will release cash to the tune of Rs 40,000 crore and this amount is sufficient to meet market demands, he said.
Vodafone Idea last week said it would take advantage of the four-year moratorium on spectrum payments. VIL had further indicated that other options proposed in the notification from the Telecommunications Department would be considered by the Board of Directors within the allotted time.
According to the letter sent to telecom operators, the government has offered the option to defer payment of spectrum auction installments due for up to four years, with immediate effect, excluding installments due for 2021 spectrum auctions. This option is applicable from fiscal year 2022-23 to fiscal year 2025-26.
These deferred amounts will be distributed equally over the remaining installments to be paid, without increasing the existing period provided for making the installments.
Interest as stipulated in the relevant year of the spectrum auction will, however, be charged so that the net present value (NPV) of the amount payable is protected.
“The option to convert the amount of interest, resulting from NPV protection due to deferred spectrum charges, relating to the moratorium period, on an equity basis, must be exercised within 90 days of such notification.” , the DoT letter had declared to the telecommunications operators. .
The letter also set out the fine print related to how the amount of interest is converted into equity.
The method of obtaining the price and the valuation of the conversion into shares of the debit interest is different for listed and unlisted companies.
One of the letters the DoT sent to a listed company mentioned that shares would be issued by the company to the government on a preferential basis. He added that the NPV of the interest amount will be calculated on the date the option is exercised.
The interest amount will continue to be treated as a business loan until the completion of the equity injection process, the DoT said.
In addition to the four-year suspension granted to companies from the payment of legal contributions, the relief program for the sector includes the authorization to share rare waves, a modification of the definition of the income on which the levies are paid and 100% of ‘foreign investments via the automatic channel.
The measures, aimed at relieving companies such as Vodafone Idea who have to pay thousands of crore in unfunded past statutory contributions, also include the removal of spectrum usage charges (SUC) for airwaves acquired in future spectrum auctions. .