The government’s move to allow telecom licensees to convert statutory dues—including spectrum and adjusted gross revenue (AGR) liabilities—into equity has sparked calls for safeguards to prevent potential misuse, according to a recent report.
Industry Reactions to the Centre’s Policy Shift
Following the Centre’s decision to convert Vodafone Idea’s ₹36,950 crore spectrum dues into government equity, Bharti Airtel has also requested the conversion of its entire AGR dues—amounting to over ₹41,000 crore—into equity. Airtel’s application, despite its comparatively stronger financial position, has raised concerns that other operators may also seek similar relief. “If such demands are accepted, the government could end up owning stakes in several private companies, which may not be an ideal scenario,” an unnamed industry expert said in the report.
Experts noted that Reliance Jio, though unaffected by the 2019 Supreme Court ruling on AGR dues, could potentially seek conversion of its spectrum liabilities into equity as well. This possibility heightens industry apprehensions about a wave of similar requests.
Concerns Over Government Ownership in Private Enterprises
Beyond major telecom players, numerous ISPs and VSAT operators also face substantial AGR dues. Without alternative relief measures, they too might pursue equity conversion to manage their debts, the report highlighted.
“The Vodafone Idea case was unique—it was a financially distressed company that might have collapsed without government intervention,” said Rohan Dhamija, head of India and the Middle East at Analysys Mason. “However, Airtel’s financial situation is much stronger, and applying the same policy without proper checks could set a risky precedent.”
Policy Impact on the Broader Business Landscape
The government’s willingness to explore equity conversion gained momentum after it paused a proposal to waive penalties and interest on AGR dues—a move that would have otherwise written off over ₹1 lakh crore for telecom companies and ₹82,000 crore for non-telecom entities. “In general, the government must frame a clear and robust policy for equity conversion to ensure it doesn’t disrupt the business environment or strain public finances,” Dhamija added.
Amid growing concerns, industry stakeholders are now looking to the Department of Telecommunications (DoT) for detailed guidelines on how the equity conversion process will be managed, with hopes that the framework will balance relief with fiscal responsibility.
