Airtel prepays in full deferred liabilities from 2012, 2015 auctions

New Delhi: Sunil Mittal-promoted Bharti Airtel said on Friday it has prepaid all its deferred liabilities for spectrum acquired in auctions in 2012 and 2015 to the telecom department. 

The prepayment included a sum of ₹7,904 crore, the company said in a statement. It did not reply to a Mint query on how much it has prepaid in total.

The move will save costs for the No 2 telco which was paying the highest interest rate of 9.75% and 10% for auction years 2012 and 2015, respectively.

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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. 

Spectrum Prepayments

The voice and data services provider bought 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.

Earlier this year, Airtel prepaid ₹8,325 crore to the government to clear part of its deferred liabilities for the spectrum it acquired in 2015. 

In 2023, Airtel 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.

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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.

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.

Companies such as Bharti Airtel and Reliance Jio Infocomm Ltd are using cheap finance to clear high-cost liabilities and refinance loans. Bigger rival Reliance Jio has prepaid ₹41,583 crore to the telecom department since October 2021, clearing dues for all spectrum bought in auctions before March 2021.