Bharti Airtel, India’s second-largest telecom operator, has pre-paid dues worth Rs 8815 crore pertaining to the 2015 spectrum auctions to the Department of Telecommunications (DoT). In a release, the telco said that pre-payment is for the instalments that were due in FY2027 and FY2028. It is worth noting that in the last four months, Bharti Airtel has cleared deferred spectrum dues worth Rs 24,334 crore ahead of the due date. In doing so, the telco has saved a lot of money in interest. These liabilities carried interest of 10%. But they have been paid because of the strong free cash flow that Bharti Airtel has been able to generate over the last few quarters.
Bharti Airtel in a Strong Position
Bharti Airtel is in a very strong position compared to where it was two years ago. The telecom operator is aiming to increase its average revenue per user (ARPU) figure from prepaid mobile services, which will further boost its revenues and help with generating more free cashflows. The company said that its focus is on financial flexibility via its capital structure which includes optimising the cost of financing and capitalising on all opportunities of significant interest saves like this pre-payment. Pre-paying the dues has its own advantages for a company. The telco has enough free cash flow that it can pre-pay Rs 8815 crore to the government for deferred spectrum dues. It will help Airtel in the long run as it would mean lesser interest payments and also lesser liabilities on the books. Before the upcoming spectrum auctions for 5G airwaves, the telcos would like to reduce their liabilities as much as possible. This is to ensure that whatever liabilities that arise during the spectrum auction doesn’t make their books look like they are filled with debt. Bharti Airtel has also raised thousands of crores in the last couple of months which has further helped the telco in making payments such as this ahead of their time.
