Bharti Airtel clears spectrum liabilities for 2016 auction with Rs. 3,626cr prepayment

Bharti Airtel announced on Thursday that it has paid 36.26 billion rupees ($426.4 million) early to the Indian government, clearing its due spectrum fees from a 2016 auction.

Bharti Airtel, a major player in India’s telecom sector, announced on December 19 that it has made a prepayment of Rs. 3,626 crores to the Department of Telecom, settling all dues related to spectrum acquired in the 2016 auction.

This payment eliminates liabilities where the interest rates exceeded 8.65%, further reducing the company’s financial burdens.

Airtel’s Spectrum Prepayment Strategy

• Total Prepayments in 2023: Bharti Airtel has prepaid Rs. 28,320 crores in spectrum liabilities during the calendar year, aiming to optimize its balance sheet and reduce high-interest costs.
• Previous Prepayments:
  • June 2023: Airtel prepaid Rs. 7,904 crores for spectrum liabilities from the 2012 and 2015 auctions, which had higher interest rates of 9.75% and 10% respectively.
  • Early 2023: The company cleared Rs. 8,325 crores, partially covering deferred liabilities from the 2015 auction, where Airtel had acquired 111.6 MHz of spectrum for Rs. 29,130.20 crores.

Implications of Prepayments

1. Cost Efficiency: By prepaying liabilities with higher interest rates, Airtel reduces its financial costs, aligning with its strategy to improve profitability.
2. Stronger Financial Position: Airtel has consistently managed its debts effectively, ensuring a robust position amidst intense competition in the telecom industry.

Spectrum Acquisitions Overview

• Airtel’s spectrum portfolio includes significant purchases from past auctions (2012, 2015, and 2016) with upfront payments made during acquisitions.
• The company’s proactive approach in settling spectrum dues reflects its commitment to financial discipline and operational efficiency.

This move by Bharti Airtel underscores its focus on strengthening its financial framework and gearing up for long-term growth in the competitive Indian telecom market.