A man walks past a Mumbai shop painted with an advertisement for Indian telecom giant Bharti Airtel on February 24, 2019. Photo: AFP / Himanshu Bhatt / NurPhoto

Bharti Airtel, India’s second-biggest telecom operator, has decided to use the payments moratorium offered by the government. Vodafone Idea took up the offer last week.

As part of a relief package for the telecom sector announced in September, the government came up with a four-year moratorium on payments of Adjusted Gross Revenue and spectrum dues. The government recently wrote to Bharti Airtel, Vodafone Idea and Reliance Jio about using the moratorium by October 29.

However, telecom companies would have to pay interest during the moratorium period. These deferred amounts would be spread equally over the remaining installments to be paid, without any increase in the existing time period specified for making the installment payments.

The government gave the operators 90 days to indicate if they wanted to opt for converting the interest amount to the moratorium period into equity.

In a Bombay Stock Exchange filing, Bharti Airtel said “we wish to inform you that the company has confirmed to avail the following options … deferment of the payment of spectrum auction installments due up to four years; and deferment of AGR related dues by a period of four years with immediate effect.”

The other options offered in the Department of Telecom’s notification would be considered by the company soon, it added.

The company said it would take a call on the option for converting the interest amount (of moratorium period) into equity at a later date.

Earlier, Bharti Airtel chairman Sunil Mittal said the company would opt for the four-year moratorium, which will help it conserve a cash outgoing of 350-400 billion rupees that would be used for network and other capital expansion programs.

The other measures announced by the government include permission to share scarce airwaves, a change in the definition of revenue on which levies are paid and 100% foreign investment through the automatic route. It also scrapped the Spectrum Usage Charge for airwaves acquired in future spectrum auctions.

These measures are expected to provide relief to troubled companies like Vodafone Idea that have to pay huge amounts in unprovisioned past statutory dues.