Shares of Bharti Airtel dropped over 1% in early deals on Friday after the telecom major opted to defer adjusted gross revenue (AGR) related dues for FY18 and FY19 amounting to around ₹3,000 crore. The Sunil Mittal-led telco in an exchange filing on Thursday said it has opted a moratorium of 4 years for AGR dues up to FY19, which are not tabulated in the Supreme Court order. It has retained the right to pre-pay instalment amounts and would not avail of the option of the conversion of the interest dues that would accrue into equity.
“Bharti Airtel has informed to DoT that the company (a) shall avail the option to defer the payment of the AGR dues upto FY2018-19 which are not tabulated in the Hon'ble Supreme Court Order, upto four years (applicable from FY22 to FY25) while retaining the right to prepay the instalment amounts; and (b) shall not avail the option of conversion of the interest dues that accrue under aforesaid option (a), into equity,” the telecom major says in the BSE filing.
The development came a week after debt-ridden rival Vodafone Idea decided to defer the payment of additional AGR dues of ₹8,837 crore by a period of four years.
The Department of Telecommunications (DoT) had recently offered the two options to telecom companies -- a moratorium of 4 years for AGR dues up to FY19 and conversion of the interest dues into equities -- apart from its support package for the cash-strapped industry.
Following the announcement, Bharti Airtel shares opened higher at ₹686, against the previous closing price of ₹683.90 on the BSE. Revering opening gains, the telecom stock declined as much as 1.1% to hit a low of ₹676.20, in sync with the broader market which was reeling under selling pressure. The BSE benchmark was trading 575 points lower at 52,443 levels, following weak cues from global peers.
With a market capitalisation of ₹3,72,194.7 crore, the stock trades higher than 5-day and 20-day moving averages, but lower than 50-day, 100-day, and 200-day averages. It has risen 0.6% in a week, while it has fallen over 2% over a month. The stock has dropped nearly 2% in the calendar year 2022, while it has given a positive return of 32% to its shareholders in the past one year.
The telecom operators are deferring AGR payments to use cash reserves to participate in the upcoming 5G spectrum auction, starting July 26. A total of 72,097.85 MHz of spectrum, with a validity period of 20 years, will be put to auction. As per the report, telcos will spend ₹31,700 for 100MHz pan-India on 3300MHz band and ₹3,500 crore for 500 MHz on 26 GHz band.
On the payment front, the spectrum purchased in the upcoming auction will have easy payment options. In the first case, the telcos will have the option to make full or part upfront payment of total bid amount within 10 days of auction completion. Part payment will have to be made at least for two years’ instalment or multiple complete years thereafter. The buyer will have the option to avail moratorium for the corresponding number of years of payment. In the second case, there is an option to make payment in 20 yearly equal instalments with the first instalment due in 10 days of completion of auction. The rate of interest of calculating instalment is fixed at 7.2%, while pre-payment of spectrum dues is also allowed without any penalty.