Airtel Boosts 5G Rollout by Prepaying ₹7,904 Cr to Clear Spectrum Dues, Enhances Cash Flow

Bharti Airtel has paid ₹7,904 crore ahead of schedule to the telecom department, settling the remaining amount for the spectrum bought in 2012 and 2015 auctions. This early payment will help the company save on interest costs.

Earlier this year, in January, Airtel had prepaid ₹8,325 crore, reducing a significant part of its deferred payments.

Financial Benefits

Analysts believe this move will save Airtel money on interest each year and improve its cash flow, especially as the company nears the completion of its nationwide 5G rollout.

On Friday, Bharti Airtel announced it had paid ₹7,904 crore to the Department of Telecom (DoT). With this payment, Airtel has cleared all deferred liabilities for the spectrum acquired in the 2012 and 2015 auctions, which had high interest rates of 9.75% and 10%, respectively.

Stock Market Reaction

Airtel’s stock ended 0.24% higher at ₹1,428.75 on the BSE on Friday. The announcement was made after the market closed.

The deferred payments were part of a four-year moratorium Airtel had chosen for spectrum and adjusted gross revenue payments. This moratorium was estimated to provide around ₹48,000 crore in cash flow relief, according to brokerage firm Nomura. The moratorium was part of a telecom relief package the government introduced in September 2021, which included the four-year moratorium, reduced bank guarantees, and an option to convert statutory dues into government equity.

Previous Prepayments

In July 2023, Airtel had prepaid ₹8,024 crore to the DoT, following a prepayment of ₹8,815 crore in March 2022 for airwaves bought in the 2015 auction. In the 2015 auction, Airtel bought 111.6 MHz of airwaves for ₹29,130.20 crore, of which ₹7,832.58 crore was paid upfront. In the 2012 auction, Airtel had purchased ₹8.67 crore worth of 2G spectrum.

Before that, in December 2021, Airtel had cleared all dues related to spectrum purchases in 2014 by prepaying ₹15,519 crore to the telecom department.