Bharti Airtel on Tuesday said it has prepaid Rs 8,325 crore to the department of telecommunications (DoT) towards part payment for the spectrum acquired in 2015. The same has been done to save on interest costs as the spectrum dues installments carried a higher interest rate of 10%, it said in an exchange filing.
This is the second time in the current financial year (FY24) that Airtel prepaid its high cost deferred liabilities ahead of the payment schedule. In July 2023, the company had prepaid Rs 8,024 crore to DoT towards part payment for the spectrum acquired in 2015.
In 2015, Bharti acquired spectrum worth Rs 29,130 crore in the auctions. The company had paid around Rs 7,833 crore upfront for the spectrum acquired. Post that, Airtel also prepaid about Rs 8,815 crore in March 2022.
In total, the company has so far paid DoT about Rs 32,997 crore towards 2015 spectrum dues, including the interest amount. Earlier, Airtel had prepaid Rs 15,519 crore for spectrum acquired upto 2014 auctions.
Notably, Airtel has been generating an annual operating free cash flow of Rs 19,000 crore, despite higher capital expenditure (capex) towards 5G rollout, Airtel CEO Gopal Vittal had said in the July-September earnings call.
In the near-to-medium term, Airtel is expected to use its cash essentially to to de-leverage and reduce the cost of financing. “Going forward, we expect this (cash flows) to only improve given Arpu growth, organic customer ads, premiumisation, portfolio resilience, our focus on cost, and capex moderation, after the elevated front loading we have today,” Vittal had said.
In August 2022, Airtel acquired 4G/5G spectrum worth Rs 43,084 crore. The company had paid Rs 8312.4 crore to DoT towards dues for spectrum acquired in the recently concluded 5G auctions.
“This upfront payment of four years allows us to drive 5G rollout in a concerted manner given our operating free cash flow. Airtel also has access to Rs 15,740.5 crore in capital from the rights issue which is yet to be called,” Vittal had said.
Prepayment of spectrum dues by telecom companies have also helped DoT to surpass its receipts targets in recent years. In FY24, the government has fixed a receipt target of Rs 89,469 crore for DoT, which it expects to achieve.