Bharti Airtel Seeks AGR Relief Following Vodafone Idea Court Win
Bharti Airtel will approach the Department of Telecommunications (DoT) seeking reassessment of its AGR dues, following the Supreme Court’s decision allowing similar relief for Vodafone Idea. The move comes as Airtel aims for parity in regulatory treatment for outstanding license fee payments.
Key Takeaways
- Supreme Court permits AGR reassessment for Vodafone Idea up to FY17
- Airtel now seeks similar treatment from DoT
- Company reported strong Q2 results with 89% profit growth
- Earlier AGR conversion proposal could give government 3-4% stake
Airtel’s Position on AGR Dues
“We welcome the fact that the recent order of the Supreme Court permits the government to undertake a comprehensive assessment, reassessment and reconciliation of the AGR dues including interest and penalties up to the financial year 2016-17. The order has been made in the petition of Vodafone Idea. We are now planning to take up our matter with the government,” Bharti Airtel vice chairman and managing director Gopal Vittal told analysts in an earnings call.
Vittal described the 2019 AGR judgment as a “body blow” to the telecom industry. He expressed disappointment that even calculation errors weren’t considered during the original assessment process.
Understanding AGR
Adjusted Gross Revenue (AGR) represents the portion of telecom company revenue subject to regulatory payments. Telecom operators pay 8% of AGR as license fees to the government, which includes 5% contribution to the Digital Bharat Nidhi fund.
Legal Context and Previous Attempts
The Supreme Court’s Monday order specifically applies to Vodafone Idea since other telecom companies didn’t file petitions for additional AGR demands up to FY17. In April, Airtel had proposed converting its approximately ₹40,000 crore AGR dues into equity, potentially giving the government a 3-4% stake in India’s second-largest telecom operator.
However, in May, the Supreme Court dismissed pleas from Bharti Airtel, Vodafone Idea, and Tata Teleservices seeking waivers on interest, penalties, and interest on penalties for pending AGR dues.
“We just wanted a non-discriminatory level-playing field in terms of an option to convert,” Vittal had said then. “Whether we will convert or not is a decision for the board to take… We wanted a clarification from the government whether we had the option or not.”
Strong Quarterly Performance
Airtel reported impressive September-quarter results, with revenue reaching ₹52,145 crore – a 25.7% year-on-year increase and 5.4% sequential growth. Net profit surged 89% to ₹6,792 crore, driven by reduced losses at associate companies and lower finance costs.
The performance was supported by increased mobile data consumption, subscriber growth, and recovery in the enterprise segment after three quarters of declining revenue.
