Airtel clears ₹15,519 cr in deferred spectrum liabilities, saves ₹3,400 cr

Bharti Airtel has paid ₹15,519 crore to the department of telecommunications as pre-payment for the entire deferred spectrum. The Sunil Mittal-led telecom major had acquired this spectrum back in 2014.

Airtel had bought 128.4 MHz spectrum for a consideration of ₹19,051 crore during the 2014 auction, the company told exchanges on Friday. This also included spectrum earlier held by Telenor.

The telecom major was supposed to pay back the liabilities arising from this spectrum acquisition in annual instalments between financial years 2026-2027 and 2031-2032, along with interest accrued at a rate of 10%. This was the highest rate amongst the deferred liabilities and borrowings, Airtel said in its statement. The deferred liability had an average residual life of over seven years.

On account of pre-paying its liabilities, Airtel estimates that it will save at least ₹3,400 crore in interest cost that was to be paid over the residual life for fully substituted capital.

“Airtel continues to exercise flexibilities towards a stronger and efficient capital structure. The company welcomes the department of telecommunications’ decision giving the industry the flexibility to prepay their deferred liabilities anytime at their NPV, basis the interest rates specified for the respective auction. This allows the licensees to efficiently plan and use their cash flows,” the Indian telco said in its statement.

Airtel, the second largest telecom operator in the country, had reported its total liabilities at more than as against ₹2.82 lakh crore ₹2.65 lakh crore for the quarter ended September 30, 2021.

The company had reported a massive jump in its consolidated net profit in the second quarter of the current fiscal at ₹1,134 crore, against a loss of ₹763 crore in the corresponding quarter of the previous fiscal. Meanwhile, revenue of the company grew over 13% to ₹28,326 crore as compared to ₹25,060 crore in the same period last year.

Even though Airtel made advance payments against its liabilities, the company’s stock fell 16 points or 2.35 per cent, to 666.20 at the close of trade on Friday as market dropped again before closing for the weekend.

With its pre-payment, Airtel became the second telco that met payment obligations this week. Vodafone Idea, or Vi, repaid ₹1,500 crore to holders of its non-convertible debentures as the instruments reached due date, putting to rest lenders’ apprehension over its repayment abilities.

Vodafone Idea Limited (VIL) paid this amount to IDFC First Bank on December 13, which included the interest amount of ₹115 crore. While the telco has been in talks with banks to raise funds for repayment purposes, the latest payment came from the bank guarantee which was recently returned by the department of telecommunications.

The telco still has to pay ₹2,000 crore by December-end or early January. The bank funding is expected to be finalized by then.

The DoT had recently returned ₹2,500 crore bank guarantee, out of an estimated ₹12,000 crore, to VIL, whereas Bharti Airtel received ₹4,000 crore from ₹8,000 crore.