Airtel Prepays Rs 8,815 Crore To Clear Deferred Liabilities For Spectrum Bought In 2015

Airtel has cleared Rs 24,334 crore of its deferred spectrum liabilities ahead of schedule over the past four months

New Delhi: Bharti Airtel, the major Indian telecom operator, on Friday said it has paid Rs 8,815 crore to the government towards part prepayment of deferred liabilities pertaining to spectrum acquired in the 2015 auction.

In a statement, the company said, “Airtel prepays Rs 8,815 crore to clear deferred liabilities for spectrum acquired in 2015.” The prepayment is for instalments due in FY27 and FY28, the Sunil Mittal-led telco said.

This is the second such prepayment by the company in the last three months and comes on the back of strong cash flow generation, equity infusion and borrowing at significantly lower interest rates.

"Over the past four months, Airtel has cleared Rs 24,334 crores of its deferred spectrum liabilities much  ahead of scheduled maturities. These liabilities carried an interest rate of 10 per cent," it said, while adding that thses have been paid off through a combination of free cash generated by the business, equity proceeds, and significantly lower cost debt of a similar tenor.

Airtel said it continues to focus on financial flexibility through its capital structure, including optimising the cost of financing and capitalising on all opportunities of significant interest saves, like the latest prepayment.

In December it had prepaid its entire liability of Rs 15,519 crore from its 2014 acquisition of 128.4 MHz spectrum. At that time Airtel had said the prepayment would help it in saving Rs 3,400 crore annually in interest expenses, acording to reports.

At 9:30 am, shares of the telecom major gained close to 1 per cent on the BSE. However, at 11.15 am, the stocks of the company slipped to 0.45 pr cent to 709 points. 

Meanwhile, a month back, Bharti Airtel’s board has given an approval for raising up to Rs 7,500 crore through debt instruments.

The telco had announced that Google will invest around $1 billion in the firm for picking up a 1.28 per cent stake and scaling up offerings of India’s second-largest mobile phone operator.

Over the past few months, telecom operators have been adding more firepower to their arsenal, as the market gears up for roll-out of 5G services that will usher in ultra-high speeds and spawn new-age services and business models.