2014 auction: Bharti pays Rs 15,519-crore spectrum dues

Bharti’s net debt at the end of the September quarter stood at Rs 1.66 lakh crore.

The prepayment would likely result in interest cost savings of around Rs 3,400 crore over the residual life for fully substituted capital, the company said.
The prepayment would likely result in interest cost savings of around Rs 3,400 crore over the residual life for fully substituted capital, the company said.

Bharti Airtel on Friday said that it has paid Rs 15,519 crore to the department of telecommunications (DoT) towards prepayment of the entire deferred liabilities pertaining to spectrum acquired in the auction held in 2014. The company had acquired 128.4 MHz spectrum, which includes the spectrum it acquired from Telenor, for Rs 19,051 crore in the 2014 auction.

These liabilities were due in annual instalments from FY26-2027 to FY31-2032 and carried an interest rate of 10% (the highest rate amongst the deferred liabilities and borrowings) and an average residual life of 7+ years. The prepayment would likely result in interest cost savings of around Rs 3,400 crore over the residual life for fully substituted capital, the company said.

After this, Bharti is left with spectrum dues of around Rs 75,000 crore, which is payable in deferred installments beyond 2032 as the company has recently opted for a four-year moratorium on such payments, offered by the government. This means that the company would now pay spectrum dues in installments for airwaves bought in auctions held in 2015 and onwards.

Bharti’s net debt at the end of the September quarter stood at Rs 1.66 lakh crore.

The first auctions were held by the government in 2010 for 3G spectrum but at that time the companies had to pay the entire bid amount upfront. It was only in auctions held since 2013 that the government introduced the concept of deferred payment. Under it, the companies are supposed to pay 25-33% of the total bid amount upfront, followed by a two-year moratorium and the remaining in equal installments spread over 16 years with the net present value intact.

The government had provided a further two-year moratorium – FY21 and FY 22 – to companies on payment of installments, and a further four-year moratorium as part of the revival package provided in September this year.

Bharti said it continues to exercise flexibilities towards a stronger and efficient capital structure. “The company welcomes the DoT’s decision giving the industry the flexibility to prepay their deferred liabilities anytime at their NPV basis the interest rates specified for the respective auction. This allows the licensees to efficiently plan and use their cash flows,” the company said in a statement.

Prior to Bharti, Reliance Jio had cleared the entire deferred spectrum dues relating to the 2016 auction amounting to about Rs 10,700 crore.

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