Bharti Airtel's Strategic Move to Convert Government Dues into Equity

In a groundbreaking move, Bharti Airtel has approached the Indian government with a proposal to swap its substantial statutory dues for equity, mirroring a recent strategy employed by Vodafone Idea. This initiative could see the government becoming a significant shareholder in one of India's leading telecommunications giants.

Outstanding Dues and Equity Conversion Details

With over Rs 70,000 crore in outstanding payments, including Rs 40,000 crore in AGR dues, Airtel's proposal aims to alleviate financial pressure while offering the government a stake in its promising growth trajectory. Approximately 6% of Airtel's equity would be transferred to the government, based on its current market capitalization of around Rs 10.5 lakh crore.

Market Reactions and Government's Potential Gains

Market analysts view this as a win-win, with the government poised to benefit from Airtel's profitability and growth, contrasting with Vodafone Idea's underperformance. Airtel's shares closed at Rs 1,845, marking a 2% decline, yet the company's robust performance hints at positive returns for the government.

Comparative Analysis with Vodafone Idea

The government's previous equity conversion with Vodafone Idea at Rs 10 per share has not yielded favorable returns, with shares currently trading at Rs 8. This backdrop underscores the potential advantages of Airtel's proposal for both parties involved.