Airtel, Jio Can Easily Manage 5G Spectrum Payments Over 20 Years

Ind-Ra (India Ratings and Research) believes that Airtel and Jio can easily pay out the first instalment within 10 days and then also make the payment of instalments for the next twenty years without any issues because of the cash flow buffer they have. Both Airtel and Jio are profitable telcos and are generating free cash flows which will give telcos enough room to make spectrum payments.

Highlights

  • Analysts are confident about the position of Airtel and Jio to grow further with 5G without any major issues.
  • Bharti Airtel and Jio first of all need to make the payment of Rs 3834 crore and Rs 7838 crore.
  • Jio spent a total of Rs 88,078 crore during the 5G spectrum auction while Airtel spent Rs 43,084 crore. 

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Airtel Jio

Analysts are confident about the position of Airtel and Jio to grow further with 5G without any major issues. All the telcos are going to make the payment for spectrum purchased in the next 20 years in 20 equal instalments. DoT (Department of Telecommunciations) will charge a 7.2% interest on the instalments. Further, telcos need to pay a tranche of the dues in the first 10 days after the auction ends. This amount has been calculated at Rs 13,500 crore which all the three private telecom operators will have to pay to DoT.

According to an ET Telecom report, Ind-Ra (India Ratings and Research) believes that Airtel and Jio can easily pay out the first instalment within 10 days and then also make the payment of instalments for the next twenty years without any issues because of the cash flow buffer they have. Both Airtel and Jio are profitable telcos and are generating free cash flows which will give telcos enough room to make spectrum payments. Since the DoT will not charge SUC (Spectrum Usage Charges) on the new spectrum and the floor of 3% has also been removed, it will also be a benefit for Airtel and Jio ass it reduces cash outgo pressure from the companies.

Airtel and Jio to Pay This Much

Bharti Airtel and Jio first of all need to make the payment of Rs 3834 crore and Rs 7838 crore. Jio spent a total of Rs 88,078 crore during the 5G spectrum auction while Airtel spent Rs 43,084 crore.

The question will be on Vodafone Idea (Vi) to be able to make the payments seamlessly. Vi doesn't have a positive cash flow and the company has failed to raise any significant capital from outside. Thus, it needs money for expansion, due payments and other things which has become an issue. In the recent 5G spectrum auction, DoT received total bids for spectrum worth Rs 1,50,173 crore for 71% of the spectrum on sale.

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