The proposal by Bharti Airtel Ltd to the government regarding converting its revenue-related dues into equity is only intended to explore whether there is an option, Vice Chairman and Managing Director Gopal Vittal said Wednesday, adding that the company will make a decision after the government clarification.
“We just want to be a non-discriminatory level game field based on the conversion options,” Vittal said. “Whether we convert or not is the decision of the board… we want the government to clarify whether there is a choice.”
Vittal discussed Airtel’s March revenues on an analyst’s call, and also involved the company’s decision to cancel subsidies on direct-to-home (DTH) set-up boxes, satellite communications plans with Starlink, and plans to grow its business. He also repeated calls for a restructuring of mobile tariffs to improve the financial situation of the industry.
Last month, Airtel urged the Department of Telecommunications (DOT) to convert its AGR (adjusted gross receipts) dues to approximately ₹Rs 4,000 crore will give the government a 3-4% stake in India’s second largest telecom operator.
Airtel’s request comes after the government’s recent remodeling of Vodafone Idea Ltd (VI). ₹The dues worth Rs 369,500 crore are integrated into the stock and are being evaluated by the Ministry of Investment and Public Asset Management.
This is the second equity conversion of the government in VI, after which it converts coupons. ₹In 2023, 100 million rupees in equity. The government now owns 49% of Vodafone Idea shares after two equity conversions.
As part of the telecommunications relief plan announced in September 2021, the government allowed a four-year extension to pay dues related to telecom operator AGR, as the industry is bearing a heavy financial burden. Operators can convert fees into government-era equity at the end of the moratorium.
“The competitive environment for paying for the level of payments to regulate dues is fair,” said Mahesh Uppal, director of telecom consulting firm Comfirst. “But I doubt whether the option must be attractive to companies like Airtel or Jio, which are not facing a funding crisis as one of Vodafone’s ideas faced.”
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“Brave phone call”
Meanwhile, Bharti Airtel canceled subsidies to consumer set-top boxes to increase cash flow to its DTH business. This is a headwind faced by the DD free cutlery service of state-owned Prasar Bharati and the price and cross-holding restrictions on the DTH broadcasting industry.
“We’ve made a brave call … we’re waiting for the competition to follow. We want to divest these subsidies because there’s no necessary subsidy in a market to spin your own customers,” Vittal said.
In the January-March quarter, Airtel’s revenue came from its DTH-operated digital TV services business, which saw revenue slightly drop to ₹7.64 million. The company’s subscriber base fell 1.5% annually to 159 million.
Earlier this month, Bharti Telemedia, a subsidiary of Bharti Airtel, and Tata Play of Tata Group, terminated negotiations to merge with the DTH business.
On Starlink and B2B Program
In the March quarter, Bharti Airtel signed an agreement with SpaceX to distribute Elon Musk-owned Starlink satellite services in India.
“Starlink will complement and enhance Airtel’s product suite to provide ubiquitous connectivity to our customers,” Vittal said. He added that Starlink’s high-speed internet will be brought to customers who have no access to the ground network.
To be sure, India’s Telecom Regulatory Authority (TRAI) recommends that satellite communications companies such as Starlink and others must pay the government 4% of their AGR as a spectrum charge. In addition, regulators have filed additional annual charges ₹The fixed satellite service providers in urban areas have a user of 500 per user.
In the business-to-business (B2B) segment, Airtel is double 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, adding that the company will launch its sovereign cloud offering in June and was scaling up investments in data centres to meet growing demand.
Regarding Bharti Airtel’s recent decision to offer a graphics processing unit or GPU-AS-A-Service, Vittal explained that this is because the quality, capability and cost of the chipset are changing rapidly.
“We don’t want to be an early promoter of the space. We’d rather be a quick follower. At some stage, we might choose that.”
Airtel Business serves businesses and contributes 11% to total revenue, with its highest line down 2.7% ₹It was 53.15 million in the March quarter as the company abandoned its low-profit wholesale business.
“In B2B, our business is a mix of many parts of the portfolio. There is a wholesale part, which is largely related to messaging and sound. This part is gradually declining due to the pressure of price and the shift from SMS to in-app notifications.
“We think our business will perform better this year compared to last year,” he said.
Calls for lower spending and tariff restructuring
Airtel expects its capital expenditure to be lower in the ongoing fiscal year ₹It spent 4.229 billion in 2024-25 years. “IT (capital expenditure) will definitely be downward because rural rollouts will be significantly slowed,” Vittal said.
He also reiterated Airtel’s call for a tariff restructuring to maintain the financial position of the telecommunications sector.
“India’s mobile tariffs remain the lowest in the world and require further repairs. We also say that India’s current telecom tariff structure is damaged. A pricing model that suits all prices is not suitable for upgrading, nor for any other market.”
Airtel’s Honcho explained that the tariff restructuring would mean reducing data allowances for certain packaging and charging more for those who can afford it.
In the March quarter, Bharti Airtel’s average revenue per user (ARPU) was flat in turn ₹245. “Remember (ARPU) was two days away in the quarter. ₹248,” Vital said.
He added that the feature phone is a smartphone upgrade, prepaid upgrade, data profitability and international roaming penetration are the growth drivers of ARPU and will remain intact.
In Homes Business, which has high-speed broadband products, including fixed wireless access, Airtel added 812,000 customers, putting its base in more than 10 million in March. The company said 40-45% of its net additions come from fixed wireless access services.
