Telcos pay Rs 17,873 crore as first instalment of 5G spectrum dues

Airtel makes advance payments for 4 years to free up capital

The Department of Telecommunications (DOT) on Wednesday received over Rs 17,873 crore from companies towards 5G spectrum dues. Nearly half the amount (Rs 8312.4 crore) was paid by Bharti Airtel, which made advance payments for four years to free up cash for future investments.

Reliance Jio and Vodafone Idea paid Rs 7,864 crore and Rs 1,680 crore, respectively. Adani Enterprises, which has acquired spectrum for captive private networks, is reported to have paid Rs 18 crore.

The first payout by telecom companies towards 5G spectrum dues is higher than the DoT’s initial calculation. The department had estimated these companies to pay up Rs 13,365 crore.

The three private mobile service providers and Adani Group purchased 51,236 MHz of spectrum worth over Rs 1.5 trillion. Reliance Jio was the biggest buyer with a spectrum purchase worth Rs 88,078 crore.

Airtel, which plans to roll out commercial 5G services this month, acquired 19,867 MHz of spectrum worth Rs 43,084 crore in various bands during the recent 5G spectrum auction. This included spectrum in 3.5 GHz, 26 GHz, and certain low and mid-bands.

Vodafone Idea and Adani Enterprises acquired spectrum worth Rs 18,799 crore and Rs 212 crore, respectively.

According to the DoT’s norms, these companies can make full or partial upfront payments for the spectrum. Companies also have the option to make payments in 20 annual equal instalments, protecting the net present value of the bid amount with an interest of 7.2 per cent.

In a statement, Airtel said this advance payment, coupled with the moratorium on spectrum dues and adjusted gross revenue (AGR)-related payments, shall free up future cash flows and allow it to dedicate resources to single-mindedly concentrate on the 5G rollout.

Over the past year, Airtel has cleared Rs 24,333.7 crore of its deferred spectrum liabilities much ahead of schedule.

Gopal Vittal, managing director and chief executive officer of Bharti Airtel, said: “This upfront payment for 4 years allows us to drive the 5G rollout in a concerted manner, given our operating free cash flow. Airtel also has access to Rs 15,740.5 crore in capital from the rights issue, which is yet to be called. With the ideal spectrum bank, best technology, and adequate free cash flow, we are excited to bring to the country a world-class 5G experience.

Last week, during the post-result conference call, Vittal said the telecom firm plans to launch 5G services starting August, and will go for a nationwide rollout soon. “By March 2024, we believe we will be able to cover every town and key rural areas with 5G. In fact, detailed network rollout plans for 5,000 towns in India are completely in place,” Vittal had said.

The company has tied up with Ericsson, Nokia, and Samsung for network agreements. “While our three-year capex plan will remain around the same levels, this rapid rollout may see some advancing of capex on an in-year basis,” Vittal stated.