Reliance Jio prepays ₹30,791 cr spectrum liabilities; eyes ₹1,200 cr interest saving

Reliance Jio, the telecom arm of billionaire Mukesh Ambani-led Reliance Industries, has prepaid its entire deferred spectrum liabilities worth ₹30,791 crore to the Department of Telecommunications (DoT), which is likely to result in “interest cost savings of around ₹1,200 crore annually”. The company cleared all outstanding dues even after DoT had given options to telecom operators of availing four year moratorium on all spectrum-related payments.

Reliance Jio Infocomm (Jio) has paid the deferred spectrum liabilities for airwaves it acquired in the year 2014, 2015, 2016, and 2021, RIL said in an exchange filing on Wednesday. Last year, Jio had bought 585.3 MHz spectrum from Bharti Airtel through trading of right to use.

“Reliance Jio Infocomm Ltd (“RJIL”), announces that it has paid ₹30,791 crore (including accrued interest) to the telecom department towards prepayment of the entire deferred liabilities pertaining to spectrum acquired in auctions of year 2014, 2015, 2016 and the spectrum acquired in year 2021 through trading of right to use with Bharti Airtel Limited,” RIL said in a filing to the BSE this morning.

Jio had executed the first tranche of prepayment in October 2021 for spectrum acquired in the auction in the year 2016, says the filing. Later in January 2022, the company paid entire deferred liabilities for airwaves acquired in the auction of the year 2014, 2015 as well as 2021, which were due annual instalments from FY23 to FY35, and carried interest of 9.3-10% per annum.

“Subsequent to Department of Telecom’s decision in the month of December 2021 providing the telcos the flexibility to prepay their deferred spectrum liabilities on any date, RJIL has now prepaid in the month of January 2022, the entire deferred liabilities acquired in auction in the year 2014 and 2015 as well as spectrum acquired through trading. These liabilities were due in annual instalments from FY 2022-23 to 2034-2035 and carried interest rate between 9.30% to 10% p.a. with an average residual period of 7+ years,” RIL said.

Earlier, the government had offered a slew of measures to the ailing telecom firms, including a moratorium of four years for the payment of the adjusted gross revenue (AGR) dues. Last month, the DoT had given telcos the flexibility to exercise the option of converting the interest that would accrue on instalment payment during the moratorium period into equity.

Sunil Mittal-led Bharti Airtel last month paid ₹15,519 crore to the DoT towards prepayment of the entire deferred liabilities pertaining to spectrum bought in the auction of the year 2014.

Meanwhile, Vodafone Idea and Tata Teleservices (Maharashtra) have decided to opt for conversion of the interest amount on AGR dues into equity and post conversion. Cash-strapped Vodafone Idea (Vi) has opted to convert about ₹16,000 crore interest dues liability payable to the government into equity which will amount to around 35.8% stake in the company.

Tata Teleservices (Maharashtra), which has paid ₹4,197 crore out of its total AGR dues of ₹16,798 crore, has also decided to opt for converting the interest amount on AGR dues into government equity. As per the company's estimates, the net present value (NPV) of its interest is expected to be nearly ₹850 crore, which will amount to the government's 9.5% stake in the company.