Airtel prepays 2016 spectrum liabilities worth ₹3,626 cr

Bharti Airtel has made a prepayment of ₹3,626 crore to the Telecom Department, clearing all its liabilities for the spectrum acquired in the 2016 auction, the company announced in an exchange filing on Thursday.

“With this payment, Airtel has settled all its outstanding spectrum dues with interest rates higher than 8.65%,” the company said in a statement.

In June, the Sunil Mittal-led Bharti Airtel prepaid ₹7,904 crore to clear all deferred spectrum liabilities from the 2012 and 2015 auctions, which carried high-interest rates of 9.75% and 10%. Airtel had originally secured 111.6 MHz of spectrum in 2015 for ₹29,130.20 crore, making an upfront payment of ₹7,832.58 crore as per auction norms.

With this prepayment, Airtel has prepaid ₹28,320 crore in spectrum liabilities this year, the company stated.

While there may not be explicit regulatory incentives for prepayment, the financial benefits of reduced interest obligations and improved liquidity make it an advantageous strategy for telecom operators. This gives them the ability to save on interest costs and finance their expansion strategies.

On December 19, Bharti Airtel's shares on the NSE closed at ₹1,599, down 0.18% from yesterday’s close of ₹1,601.90.

Meanwhile, rival Reliance Jio had prepaid ₹30,791 crore in deferred spectrum to the Telecom Department in January 2022 itself. This covered spectrum acquired in the 2014, 2015, and 2016 auctions, as well as 585.3 MHz of spectrum obtained in 2021 through trading rights with Bharti Airtel. Details on payments made by Vodafone Idea so far, however, remain unclear.

However, the telecom companies still owe Adjusted Gross Revenue (AGR) dues to the Centre, a key point of contention between the government and private operators.