Airtel prepays Rs 8,815 cr of spectrum rights to cut interest charges
Bharti Airtel has prepaid Rs 8,815 crore for spectrum rights to reduce interest charges.
The rights were for spectrum acquired in 2015 and the corresponding payments were due in fiscal years 2027 and 2028, the telecommunications company said on Friday.
This is the second such prepayment by the company in the last three months and is underpinned by strong cash flow generation, equity injection and borrowing at significantly lower interest rates.
“Over the past four months, Airtel has cleared Rs 24,334 crores of its much deferred spectrum liabilities
before the scheduled deadlines. These debts carried an interest rate of 10%,” he said.
After the last payment, Airtel has balance spectrum rights of approximately Rs 67,000 crore and adjusted gross revenue rights of Rs 25,000 crore.
“Airtel continues to focus on financial flexibility through its capital structure, including optimizing the cost of funding and capitalizing on any significant interest savings opportunities like this early redemption,” the company said in a statement. .
By December, it had prepaid its full liability of Rs 15,519 crore from its 2014 acquisition of the 128.4 MHz spectrum. At that time, Airtel said prepayment would help it save Rs 3,400 crore per year in interest charges.
The company had reported a 2.8% decline in net income in the third quarter of fiscal 2022 due to an increase in tax expenditures. Net profit for the quarter was Rs 830 crore. However, it generated free cash flow of Rs 8803 crore in the third quarter of FY22, compared to Rs 7046 crore in the same period last year. The company had indicated that it would use its free cash flow to pay off high-cost debt.