Airtel's equity call puts telecom policy to the test

Airtel’s request to swap AGR dues for equity tests the spirit of telecom reforms— should public interest outweigh operator strength and policy loopholes?

- JAIDEEP GHOSH

Bharti Airtel has recently requested the Department of Telecommunications (DoT), to convert its deferred Adjusted Gross Revenue (AGR) dues, amounting to approximately Rs 41,000 crore, into government equity.

This move closely follows the government's decision in March to convert Rs 36,950 crore of Vodafone Idea’s spectrum dues into equity, thereby increasing its stake in the financially strained operator to 49% from an earlier holding of around 23%.

AGR DISPUTE AND THE SUPREME COURT RULING

The dispute surrounding AGR in the Indian telecom sector has unfolded over more than two decades, marked by numerous legal challenges and landmark rulings, especially over the interpretation of revenue definitions. The genesis of the issue can be traced back to 1999, when the government transitioned the telecom licensing framework from a fixed-fee model to a revenue-sharing model.

Telecom operators disputed the inclusion of non-telecom revenue, such as interest income, dividends, and capital gains, in AGR, arguing that only core service revenues should be counted. However, in October 2019, the Supreme Court unequivocally sided with the government's broader definition of AGR, which encompassed these non-telecom revenue streams. This ruling imposed retrospective liabilities exceeding Rs 1.4 lakh crore across the industry, with individual dues accruing to Airtel, Vodafone Idea, and other operators.

In 2008–2009, the US government acquired equity stakes in major banks and automakers under the Troubled Asset Relief Program to stabilise the financial system.

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