Bharti Airtel prepays Rs 15,519 crore to clear 2014 spectrum dues

Move to help company save up to Rs 3,400 crore in interest expenses

Bharti Airtel has prepaid its entire liability of Rs 15,519 crore from its 2014 acquisition of 128.4 MHz spectrum. The move will help the company save around Rs 3,400 crore in interest expenses.

Airtel had purchased 128.4 MHz spectrum for Rs 19,051 crore in the 2014 auction. This includes the spectrum that it secured following the acquisition of service provider Telenor in 2018.

In a stock exchange notification on Friday the company said these liabilities were due in annual installments from FY 2026-2027 to FY 2031-2032. They carried an interest rate of 10 per cent (the highest rate among the deferred liabilities and borrowings) and had an average residual life of over seven years.

“The company estimates that the prepayment will likely result in interest cost savings of at least Rs 3,400 crore over the residual life for fully-substituted capital,” the company said.

“Airtel continues to exercise flexibilities towards a stronger and efficient capital structure. The company welcomes the department of telecom’s (DoT’s) decision, giving the industry flexibility to prepay deferred liabilities any time at the NPV (net present value) basis at interest rates specified for the respective auction. This allows the licensees to efficiently plan and use their cash flows,” it added.

While the dues for the 2014 auction have been settled, Airtel has an additional Rs 74,500 crore payments due for spectrum acquired through various auctions between 2012 and 2021. For spectrum acquired in 2021, the payments need to be completed by 2038-39.

With regard to adjusted gross revenue (AGR) dues, Airtel has already paid around Rs 18,400 crore. Its balance AGR dues are Rs 25,000 crore.

In October, the board of Bharti Airtel decided to opt for a four-year moratorium for payment of spectrum and AGR dues. 

The Centre, in September, cleared the telecom reforms, giving the much-needed liquidity to the telecom sector. The reforms, it is hoped, will help companies expand operations and investment in new technologies like 5G. 

Bharti Airtel chairman Sunil Mittal had earlier said that the deferral would free up around Rs 35,000-40,000 crore in cash that will help the company invest in new technologies.

In October, Reliance Jio paid Rs 10,792 crore to the DoT for 269.2 MHz of spectrum it acquired in 2016.

While it made payment for the 2016 auction, it still has dues of around Rs 15,000-16,000 crore for spectrum acquired in 2014 and 2015. Unlike its peers, Jio has not opted for a moratorium on spectrum dues.