Airtel opts for AGR dues moratorium, becomes the second telco to do so

• Airtel has opted for the four-year adjusted gross revenue (AGR) dues moratorium.
• The telco is expected to free up its cash-flow by up to ₹40,000 crore for four years.
• Vodafone Idea had opted for the moratorium last week.

The government recently announced a deadline of October 29 for opting for the adjusted gross revenue (AGR) dues moratorium. As per industry sources, Bharti Airtel has now informed the government that it wants to opt for the four-year moratorium.

Airtel has become the second telco to opt for the moratorium after Vodafone Idea. Vodafone Idea had opted for the moratorium last week and the struggling telco is expected to free up its cash-flow by up to ₹60,000 crore for four years.

Airtel is also expected to free up its cash-flow by up to ₹40,000 crore due to the moratorium. Airtel has not informed the government whether it wishes to convert the accrued interest into equity and has 90 days to do so.

Airtel will benefit from the four-year moratorium on AGR dues, freeing up its cash reserves to invest in the upcoming 5G spectrum auctions.

Business Insider India has reached out to Airtel for confirmation about the moratorium. We will update the story once Airtel responds.

What is AGR?

In 1999, the government and telecom operators shifted to a revenue-sharing fee model that requires them to share a part of their adjusted gross revenue (AGR) with the government as annual licence fee and spectrum usage charges.

AGR is defined in the licence agreements entered between the Department of Telecommunications (DoT) and the telecom operators.

What are the benefits of the moratorium?

The companies who avail the moratorium facility will have to pay interest on the amount and period of moratorium, since the government would have to protect its revenue. Both banks and telcos will benefit from de-stressed balance sheets thanks to this relief measure.

Apart from this, the government has announced that instead of compounding interest on spectrum dues on a monthly basis, it will now do so on an annual basis. This should drastically reduce the impact of compounding and offer major relief to telecom players who have to pay AGR and spectrum dues.

Here’s how much Vodafone Idea and Airtel owe the government in the form of AGR dues:

Company	Total AGR demand (in crore)	AGR dues paid (in crore)	Balance AGR dues (in crore)
Vodafone Idea	₹58,254	₹7,854	₹50,339
Airtel	₹43,980	₹18,004	₹25,976

Source: AGR dues case in the Supreme Court

SEE ASLO:

Airtel, Vodafone Idea and Jio welcome telecom relief package, but analysts are divided on whether it is enough

Airtel, Vodafone Idea and Reliance Jio have till October 29 to opt for the AGR dues moratorium