Bharti Airtel Has Prepaid Rs 15519 Crore Deferred Spectrum Liability to DoT

By prepaying the liability, Bharti Airtel expects that it would save at least Rs 3400 crores in interest over the residual life for fully substituted capital. The DoT has allowed the telcos to prepay their deferred dues anytime at their NPV (net present value) basis the interest rates specified for the respective auction.

Highlights

  • The spectrum liabilities surfaced when Airtel acquired 128.4 MHz of spectrum from DoT which included Telenor’s spectrum for Rs 19,051 crore in the 2014 auction.
  • Bharti Airtel had to pay off these liabilities starting FY27 to FY32 in annual instalments.
  • This will help Bharti Airtel in efficiently using its cash flow for the upcoming 5G spectrum auctions.

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In a statement, Bharti Airtel, India’s second-largest telecom operator, said that it had prepaid the entire deferred spectrum liability from the 2014 auction worth Rs 15,519 crore to the Department of Telecommunications (DoT). The spectrum liabilities surfaced when Airtel acquired 128.4 MHz of spectrum from DoT, which included Telenor’s spectrum for Rs 19,051 crore in the 2014 auction.

Bharti Airtel had to pay off these liabilities starting FY27 to FY32 in annual instalments. The dues carried an interest of 10% along with an average residual life of seven years. But Airtel said that it had paid the entire deferred spectrum liability to the DoT that pertained to the 2014 spectrum auction.

Bharti Airtel Estimates Savings of Rs 3400 Crores At Least Over the Residual Life

By prepaying the liability, Bharti Airtel expects that it would save at least Rs 3400 crores in interest over the residual life for fully substituted capital. The DoT has allowed the telcos to prepay their deferred dues anytime at their NPV (net present value) basis the interest rates specified for the respective auction.

This will help Bharti Airtel in efficiently using its cash flow for the upcoming 5G spectrum auctions. The pre-payment of such a large amount of dues suggests the kind of position Bharti Airtel is in. The telco is enjoying the fruits of tariff hikes and help from the government.

In addition to this, the return of bank guarantees (BGs) by the DoT has helped the telco in enriching cash resources.

Despite the pre-payment, at the time of writing, Bharti Airtel is trading at Rs 667.25, which is 2.08% in the red from its previous close. Not just Airtel, but all the telecom stocks are trading in the red amid weak global cues. NIFTY50 is down 1.09%, while SENSEX is down 1.10%. It has turned out to be a freaky Friday for the money market in India.

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