Bharti Airtel Ltd’s proposal to the government on converting the telecom operator’s revenue-linked dues into equity was only intended to explore if such an option was available, vice chairman and managing director Gopal Vittal said on Wednesday.
“On the (adjusted gross revenue) conversion, for us it was quite simple. We just wanted a non-discriminatory level-playing field in terms of an option to convert,” Vittal said during a call with analysts to discuss Airtel’s March-quarter earnings. “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.”
Last month, Airtel urged the Department of Telecommunications (DoT) ₹40,000 crore into equity”>to convert its AGR dues of about ₹40,000 crore into equity, which would give the government a 3-4% stakeholding in India’s second-largest telecom operator.
The trigger for Airtel’s proposal, which the department of investment and public asset management is evaluating, was the government’s recent conversion of Vodafone Idea Ltd’s (Vi) ₹36,950 crore worth of spectrum dues into equity.
That was the second equity conversion by the government in Vi after it converted interest dues worth ₹16,133 crore into equity in 2023. Post the two equity conversions, the government now holds a 49% stake in Vodafone Idea.
As part of the telecom relief package announced in September 2021, the government allowed a four-year deferment for paying dues linked to the adjusted gross revenue of telecom operators as the sector was grappling with heavy financial burden. Telecom operators could convert the dues into equity at the end of the moratorium period at the option of the government.
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‘A brave call’
Bharti Airtel is eliminating subsidies on consumer set-top boxes as the direct-to-home (DTH) broadcasting industry faces headwinds from state-owned Prasar Bharati’s DD Free Dish service as well as pricing and cross-holding restrictions, Vittal said.
“We have taken a brave call… We are waiting for the competition to follow. We hope sense will prevail to strip those subsidies out because there is no point putting in subsidies in a market where the only subsidy is going in to rotate your own customer,” Vittal said.
In the January-March quarter, Airtel’s revenue from its Digital TV services business, which houses its DTH operations, was marginally down on-year to ₹764 crore. The company’s subscriber base fell 1.5% on-year to 15.9 million.
Earlier this month, Bharti Airtel’s subsidiary, Bharti Telemedia, and Tata Group’s Tata Play terminated talks to merge their DTH businesses.
On Airtel’s Starlink and B2B plans
During the March quarter, Bharti Airtel signed an agreement with SpaceX to distribute the Elon Musk company’s Starlink satellite internet services in India.
“Starlink will complement and enhance Airtel’s suite of products to provide ubiquitous connectivity across the country to our customers,” Vittal said, adding that Starlink’s high-speed internet will be brought to customers where they are not able to access terrestrial networks.
In the business-to-business segment, Airtel is doubling down on its effort to offer a suite of products including cloud technologies, internet of things (IoT), and communications platform-as-a-service (CPaaS), to enterprises, Vittal said.
The company will launch its sovereign cloud offering in June, the managing director said, adding that Airtel was scaling up investments in data centres to meet growing demand.
On Bharti Airtel’s recent decision to steer clear of offering graphics processing unit, or GPU-as-a-service, Vittal explained that this was because the quality, capacities and cost of chipsets were changing raplidly.
“We don’t want to be an early mover in the space. We rather be a fast follower. At some stage, we may pick this up,” he said.
Airtel Business, which houses services to enterprises and contributes 11% to total revenue, fell 2.7% on-year to ₹5,315 crore in the March quarter owing to the company shedding low-margin wholesale business.
“In B2B, our business is a mix of many parts of the portfolio. There is a wholesale part, which is largely to do with messaging and incoming voice. This part is broadly declining because of the pressure on price as well as the shift away from SMS to in-app notifications,” Vittal said, adding that the company has shed a substantial part of the low-margin business and will shed more.
“Our business, we believe, will perform better now this year compared to last year,” he said.
Lower spending and a call for tariff restructuring
Airtel expects its capital expenditure in the ongoing financial year to be lower than the ₹42,290 crore it spent in 2024-25. “It (capex) will certainly trend downwards and the reason is that the rural rollout will substantially slow down,” Vittal said.
He also reiterated Airtel’s call for a tariff restructuring to sustain the financial health of the telecom sector.
“India mobile tariffs continue to remain one of the lowest globally and need further repair. We have also said that the current telecom tariff structure in India is broken. One-size-fits-all pricing model is not appropriate for upgradation nor is it in line with any other market,” Vittal said.
Vittal explained that a tariff restructuring would mean reducing data allowances on some of the packs and charging more for those who can afford to pay.
During the March quarter, Bharti Airtel witnessed a flat growth sequentially in average revenue per user (Arpu) at ₹245. “Remember it (Arpu) was impacted by two less days in the quarter. On an equal day basis, Arpu stood at ₹248,” Vittal said.
He added that feature phone to smartphone upgradation, prepaid to postpaid upgradation, data monetization, and international roaming penetration were the growth drivers of Arpu and will remain intact.
In the homes business, which houses high speed broadband offering including fixed wireless access, Airtel added 812,000 customers, taking its base to over 10 million in March. The company said 40-45% of its net additions came from fixed wireless access services.
