Bharti Airtel has prepaid ₹3,626 crore to the Department of Telecommunications (DoT), clearing all its outstanding dues related to the 2016 spectrum auction. This strategic move allows India’s second-largest telecom operator to save on interest costs while boosting its cash flow, fueling its expansion of 5G networks and rural 4G coverage.
Airtel Clears 2016 Spectrum Dues
Airtel’s latest payment means it has fully cleared the spectrum dues from its 2016 purchase, including airwaves in the 1800 MHz, 2100 MHz, and 2300 MHz bands. The company stated that this action will help it reduce annual interest costs and strengthen its balance sheet as it aggressively rolls out 5G services and enhances its 4G network in rural areas.
“Following this payment, Airtel has prepaid ₹28,320 crore of spectrum dues in 2024 alone,” the company announced. A significant portion of this payment was made from Airtel’s own cash flow, according to sources familiar with the matter.
By clearing its spectrum dues ahead of schedule, Airtel has avoided the higher interest rates of over 8.65% on its deferred liabilities. This move builds on previous prepayments made earlier in 2024, including ₹8,465 crore in September and ₹7,904 crore in June, which cleared outstanding dues from earlier spectrum auctions in 2012 and 2015.
The prepayment strategy is designed to reduce Airtel’s long-term liabilities and free up funds for investment in infrastructure and technological advancements, particularly its 5G rollout. Airtel’s total prepaid amount in spectrum dues for 2024 now stands at a significant ₹28,320 crore.
Impact on Airtel’s 5G and 4G Expansion
Airtel’s recent actions are part of a broader plan to accelerate its 5G network expansion and extend 4G coverage in rural areas. The operator remains committed to enhancing its nationwide services as it remains a leader in the rapidly growing telecom sector. In the recent June 2024 spectrum auction, Airtel was the top bidder, spending ₹6,857 crore for additional airwaves to enhance its coverage and network capacity.
The Bigger Picture: Telecom Relief and Financial Strategy
Airtel’s aggressive debt reduction strategy was also aided by a relief package introduced by the Indian government in 2021, which included a four-year moratorium on spectrum payments and reduced bank guarantees. This move, expected to provide around ₹48,000 crore in cash flow relief, was a crucial part of Airtel’s ability to prepay significant portions of its liabilities.
While Airtel’s stock closed slightly lower by 0.15% at ₹1599 on Thursday, the company’s strategic prepayment decisions indicate a strong financial position and long-term growth potential. With a robust financial strategy in place, Airtel continues to position itself as a dominant player in India’s telecom sector, focusing on infrastructure upgrades, competitive pricing, and expanding coverage across the country.
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