26 Mar , 2022 By : Kanchan Joshi
NEW DELHI : Bharti Airtel said Friday that it has prepaid Rs8,815 crore to clear deferred liabilities for spectrum acquired in 2015 for instalments due in FY 2027 and FY 2028.
"These liabilities carried an interest rate of 10% and have been paid off through a combination of strong free cash generated by business, equity proceeds and significantly lower cost debt of similar tenor," the company said.
Over the last four months, Airtel has cleared Rs24,334 crore of its deferred spectrum liabilities much ahead of scheduled maturities.
Airtel continues to focus on financial flexibility via its capital structure including optimising cost of financing and capitalising on all opportunities of significant interest saves like this prepayment.
Airtel had earlier pre-paid Rs15,519 crore due to the government for the spectrum it acquired in the 2014 auctions. These liabilities were due in annual instalments 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 had said the prepayment will likely help save at least Rs3,400 crore in interest costs.
This saving will aid the company’s capital expenditure and cash flows when it is channelling investments towards expanding its 4G and 5G footprints.
Airtel acquired 128.4 MHz spectrum for Rs19,051 crore in the 2014 auction, including spectrum belonging to Telenor’s India unit.
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 company had said.
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