Bharti Airtel, India’s second-largest telecom services provider, said on Monday it has prepaid ₹8,465 crore to the department of telecommunications, clearing all dues against spectrum acquired in 2016.
That year, Airtel bought 173.8 Mhz spectrum for ₹14,244 crore in the 1800, 2100 and 2300 Mhz bands through auction. Telecom operators that had acquired radio frequencies in 2016 were required to pay off the dues through annual instalments over 12 years, including two years of moratorium for making a substantial upfront payment.
Company prepays dues for third time this year
The liabilities carried an interest rate of 9.3%, Airtel said in a statement. This is the third time this year that the company has prepaid dues for spectrum acquired in previous auctions.
In June, the Sunil Mittal-promoted telecom operator prepaid all its deferred liabilities for spectrum acquired in auctions of 2012 and 2015, where it was paying a high interest rate of 9.75% and 10%. The prepayment totalled ₹7,904 crore.
Earlier in the year, Airtel prepaid ₹8,325 crore to the government to clear part of its deferred liabilities for the spectrum it acquired in 2015. In the 2015 auctions, Airtel acquired 111.6 MHz of spectrum for ₹29,130.20 crore. It had paid ₹7,832.58 crore upfront as part of the rules at that time.
Last year, it prepaid ₹8,024 crore in July and ₹8,815 crore in March, before the due dates set for FY27 and FY28 for the same set of airwaves. In the auctions held in 2014, Airtel bought 128.4MHz spectrum for ₹19,051 crore, including spectrum belonging to Telenor’s India unit.
Telcos are permitted to pay the full cost of the spectrum they buy in auctions through partial payment upfront and annual instalments over the period of the licence, which is 20 years. In September 2021, the government gave telcos the flexibility to prepay deferred liabilities as part of a rescue package. The package included a four-year spectrum payment moratorium, the option to convert interest on the spectrum and other dues to the government into equity, and reduced bank guarantees.
Between November 2021 and March 2022, Airtel had prepaid ₹24,334 crore of its deferred spectrum liabilities ahead of scheduled maturities for auctions held before 2014. It had earlier prepaid in full ₹15,519 crore due to the government for the spectrum it acquired in the 2014 auctions.
Airtel had prepaid spectrum in previous auctions for which liabilities were due in annual instalments from FY27 to FY32, and carried an interest rate of 10% and an average residual life of more than seven years. Companies such as Airtel and Reliance Jio that operate in the capital-intensive telecom sector are using cheap finance to clear high-cost liabilities. In 2022, bigger rival Jio prepaid ₹41,583 crore to the telecom department, clearing dues for all spectrum bought in auctions before March 2021.
