Telecom operator Bharti Airtel on Friday said that it has paid ₹8815 crores to the government. This was a part prepayment of deferred liabilities pertaining to spectrum acquired in the 2015 auction, the instalments for which are due in FY2027 and FY2028, the company said in a statement.
“These liabilities carried an interest rate of 10% and have been paid off through a combination of strong free cash generated by the business, equity proceeds and significantly lower cost debt of similar tenor,” the company said.
Airtel has cleared 24,334 crores of its deferred spectrum liabilities ahead of schedule over the last four months. In June 2021, the company had a debt of ₹ 1.6 lakh crores including AGR and Spectrum dues and it has been repaying its dues very quickly. Experts believe that at this rate it will quickly lower its debts.
Earlier, the company had pre-paid ₹15,519 crores due to the government for the spectrum it acquired in the 2014 auctions. The 128.4 MHz spectrum, including the spectrum belonging to Telenor’s India unit, was acquired for ₹19,051 crores.
Instalments were due from FY2026-2027 to FY2031-2032 and carried an interest rate of 10% (the highest rate among the deferred liabilities and borrowings) and an average residual life of 7+ years.
The company said that it is focusing on financial flexibility via its capital structure, including optimising the cost of financing and capitalising on all opportunities of significant interest saves, like the latest prepayment, which will help it to save at least ₹3,400 crores in interest costs. Further, this saving will help the company to channel investments towards expanding its 4G and 5G footprints.
The company said that the government’s decision to give industry the flexibility to pre-pay their deferred liabilities anytime at their net present value basis the interest rates specified for the respective auction “allows the licensees to plan and use their cash flows efficiently.”
The consolidated net debt of the company had increased to ₹1.59 trillion in the October to December quarter from ₹ 1.47 trillion during the same period, a year ago. With the part prepayment of its debts, the
Shares of the Sunil Mittal led company surged 1.06% and were trading at ₹713.80 levels at 9:55 AM on Friday after the announcement of prepayment of debt.
Future Prospects
Recently, Randeep Sekhon, Chief Technology Officer, airtel said that the company will be buying 5G network equipment from European vendors such as Nokia and Ericsson instead of Chinese vendors.
“5G will be enabling the metaverse, which requires a lot of data. Metaverse will need much higher speeds and need to be closer to the edge content. Telcos will play a major role. It could be used for sports events, gaming or even business meetings.” he said as Airtel is readying for a Metaverse opportunity in India with 5G.
On Thursday, Bharti Airtel showcased the ‘future of video entertainment’ using the 3500 MHz bands 5G test spectrum. It demonstrated a LIVE 5G powered hologram of Kapil Dev’s virtual avatar in real-time from a remote location.
Airtel has partnered with Netflix and other OTT platforms to offer free subscriptions with its postpaid packages worth ₹1199 and ₹1599.
As per TRAI data, the mobile user count in India fell by 1.28 crore in December 2021 as compared to November 2021. Reliance Jio and Vodafone Idea suffered subscriber losses while Bharti Airtel added customers. The user base of Reliance was at 41.57 crores, Vodafone was at 26.55 crores and Airtel widened its user base to 35.57 crores in December 2021.
Disclaimer
The content in this news article is not investment advice. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
