Telecom major Bharti Airtel and subsidiary Bharti Hexacom have prepaid additional Rs 5,985 crore worth of high-cost debt for spectrum to the Department of Telecom, as well as voluntarily redeemed $1 billion worth of perpetual bonds issued be the company, according to an exchange filing on March 26.
Airtel said it has now prepaid Rs 25,981 crore of high-cost spectrum liabilities for FY25, and cumulatively prepaid liabilities of Rs 66,665 crore as on date. The move by Airtel to lower its debt burden is seen as a step to improve the financial position, and lower the cost of its debt.
"Underscoring its commitment to financial prudence, operational efficiency, and its strong capital position, Airtel continues to prepay its high-cost spectrum liabilities, lowering its debt and cost of debt," the statement by Airtel said.
The average interest rate on the cumulative liabilities prepaid was approximately 9.74%, Airtel said, and the prepayments have been made about 7 years ahead of their average residual maturities. The spectrum liabilities, tied to the 2024 auctions with an interest rate of 8.65%, were prepaid nearly seven years ahead of their average residual maturities, reducing Airtel's exposure to costlier debt.
The prepayments have resulted in Airtel clearing Rs 1.16 lakh crore of scheduled payments, the telecom player added. Airtel has also lowered its cost of debt on the spectrum liabilities to an average of approximately 7.22% on the remaining Rs 52,000 crores of liabilities, excluding AGR dues. The residual spectrum liabilities now carry a long repayment profile, payable in annual instalments until FY42.
Post the redemption of $1 billion in perpetual notes, Airtel will have nearly $479 million of perpetual bonds outstanding, issued in FY21, and slated to mature in FY26.
Airtel has been stepping proactive measures to lower its cost of borrowing and prepay the spectrum dues over FY25. In September 2024, Airtel prepaid Rs 8,465 crore to the telecom department to clear deferred dues for spectrum acquired in 2016. It subsequently made a payment of Rs 3,626 crore to the Department of Telecom in December 2024, fully clearing its liabilities for the spectrum acquired during the 2016 auction.
This twin-action is expected to strengthen Airtel’s balance sheet while it rolls out 5G and expands its coverage of rural 4G network. The telecom player has planned to direct greater capex for 5G expansion, and won't be spending additionally on 4G capacity expansion.
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