Bharti Airtel has prepaid a sum of Rs 8,815 crore to the Telecom Department, clearing a sizable chunk of dues relating to airwaves bought during the 2015 sale. The move is likely to result in sizable interest cost savings and improve the company’s cash flows as it ramps up 4G coverage and readies to participate in the upcoming 5G spectrum sale around May-June, say experts.
“Airtel has paid Rs 8,815 crore to the Department of Telecom (DoT) towards part prepayment of deferred liabilities pertaining to spectrum acquired in the auction of the year 2015,” India’s second largest telco said in a statement Friday. It added that the “prepayment is for instalments due in FY27 and FY28”.
Over the past four months, Bharti Airtel has cleared Rs 24,334 crore of its deferred spectrum liabilities ahead of scheduled maturities. These liabilities, the telco said, carried an interest rate of 10% and have been paid off through a combination of strong free cash generated by the business, equity proceeds and significantly lower cost debt of a similar tenor.
Last December, Airtel had prepaid Rs 15,519 crore to the DoT, clearing all dues relating to airwaves bought in the 2014 sale. “Airtel continues to focus on financial flexibility via its capital structure including optimizing the cost of financing and capitalizing on all opportunities of significant interest saves like this prepayment,” the company said. Airtel shares were up 0.7% to Rs 711.10 on Friday morning trade on the BSE.