NEW DELHI: In a significant development, Bharti Airtel is understood to have approached the govt for swapping its statutory dues with equity, something that has been done in the case of beleaguered Vodafone Idea.The company is understood to have outstanding govt payment dues of over Rs 70,000 crore, including Rs 40,000 crore of AGR dues.
Sources said that Airtel believes that the measure will help it conserve cash, while also enabling the govt to be a part of a fast-growing enterprise which carries prospects of a growth in share price and resultant valuations. “A proposal to this effect is understood to have been submitted to the department of telecom,” a source said.
Airtel has not officially commented on the matter as yet.
The formula to swap the outstanding statutory payment dues with equity had been initiated by the department of telecom to help the industry, particularly loss-making Vodafone Idea tide over the financial challenges and continue as a going concern.
Airtel’s current market cap is around Rs 10.5 lakh crore, as per the details on the Bombay Stock Exchange. The company will need to transfer around 6% equity to the govt to clear its statutory dues. Shares of Airtel closed the day at Rs 1,845 on the BSE, down 2%.
Market analysts believe that govt has “a chance of realising positive returns” from the Airtel equity, considering that the company has been growing in profitability. This will be unlike Vodafone Idea where the value of its stake value has so far only fetched negative returns with the company’s scrip remaining below Rs 10 for most of the period of govt’s holding.
Govt had converted the Voda Idea statutory debt into equity at a price of Rs 10 per share, which is the face value. The current price of the company’s share is Rs 8, down one per cent at close on Thursday.