Bharti Airtel clears deferred spectrum liability from 2014

On Friday, Bharti Airtel said that it has paid Rs. 15,519 crores to the DoT towards prepayment of the entire deferred spectrum liabilities from 2014.

Bharti Airtel Clears 2014 Spectrum Dues

Notably, in 2014, during the 3G spectrum auction, the telco had acquired 128.4 MHz spectra worth Rs. 19,051 crores. As the DoT's spectrum repayment norms define, it had annual installments from FY 2026-27 to 2031-32, with an interest rate of 10%. Therefore, the telco had to pay the highest interest rate amongst the deferred liabilities and borrowings. Furthermore, this would have meant a lot of extra expense for the telco. That has been the motivation behind paying the spectrum liability off before the installments scheme kicked in.

Hence, Bharti Airtel noted that it will save interest worth Rs 3,400 crores over the residual life. Incidentally, this particular liability would have had a residual life of 7 years. Therefore, Airtel has managed to save at least Rs. 23,800 crores. While Airtel had opted for all the moratoriums that were available to it, the move to clear these dues will help the telco in the long run.

The high interest rates have prompted telcos to move to clear spectrum liabilities first before the installments kick in. Earlier this year, Reliance Jio cleared dues from the 2016 spectrum auction. Back in October, the largest telco cleared dues worth Rs. 10,792 crore. The telco had cleared the same to avoid a similar cash flow savings. However, so far, only Jio and Airtel have moved to clear the previous spectrum dues. It remains to be seen if and when Vodafone Idea might take a similar step.