Bharti Airtel Prepaid ₹7,904 Cr Spectrum Dues, Saving Interest Costs

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Synopsis:

Bharti Airtel prepaid ₹7,904 crore for spectrum dues from 2012 and 2015 auctions, saving on high interest rates of 9.75% and 10%. The company aims to minimise financing costs, improve cash flows, and support its extensive 5G rollout, which demands substantial capex.

Bharti Airtel News Today

Bharti Airtel announced it had prepaid ₹7,904 crore to the Department of Telecommunications (DoT) to clear deferred liabilities for spectrum acquired in the 2012 and 2015 auctions.

This strategic move was aimed at saving interest costs, with the respective interest rates for these dues being 9.75% and 10%.

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Previous Payments

In FY24, Airtel prepaid a total of ₹16,349 crore towards high-cost deferred spectrum liabilities from 2015. Previously, Airtel had acquired spectrum worth ₹29,130 crore in the 2015 auctions, with an upfront payment of ₹7,833 crore.

Additional prepayments included ₹8,815 crore in March 2022 and ₹8,024 crore in July 2022. In January 2024, Airtel prepaid another ₹8,325 crore.

The company has aimed to minimise financing costs, improve cash flows, and support their extensive 5G rollout, which has demanded substantial capital expenditure (capex).

Cash Flow and Interest Savings

Airtel’s proactive prepayments are part of a broader financial strategy to enhance cash flow management and reduce interest expenses. Analysts estimate that Airtel generates an annual free cash flow of ₹40,800 crore, despite significant capex on 5G infrastructure.

Historical Context and Future Plans

Airtel’s prepayments include dues from acquisitions of Videocon's spectrum assets in 2016 and Telenor's India unit in 2018, which were initially part of the 2G auction in 2012.

The government’s telecom relief package, introduced in September 2021, offered a four-year moratorium on spectrum and adjusted gross revenue (AGR) payments, providing ₹48,000 crore in cash flow relief.

This moratorium, coupled with reduced bank guarantees and the option to convert statutory dues into equity, has been pivotal in Airtel’s financial manoeuvres.

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This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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