Telecom giant Bharti Airtel and its subsidiary Bharti Hexacom have prepaid an additional ₹5,985 crore of expensive spectrum debt to the Department of Telecom (DoT) and redeemed $1 billion of perpetual bonds, an exchange filing on March 26 stated.
With this recent move, Airtel has now prepaid ₹25,981 crore of spectrum liabilities for FY25 and a total amount of ₹66,665 crore to date. The prepayment is part of the company’s goal to deleverage and reduce financing costs.
Airtel stated in its filing: “Highlighting its emphasis on financial prudence, operating efficiency, and its strong capital position, Airtel continues to prepay its high-cost spectrum liabilities, lowering its debt and cost of borrowing.”
Debt Reduction & Cost Benefits
- The average interest rate on the prepaid spectrum liabilities stood at 9.74%.
- The ₹5,985 crore prepayment was made 7 years ahead of the average residual maturity period.
- Spectrum liabilities from the 2024 auctions, which carried an interest rate of 8.65%, have now been cleared well before their due date.
- Airtel has successfully cleared ₹1.16 lakh crore in scheduled payments.
Following this prepayment, Airtel has reduced its cost of debt on spectrum obligations to 7.22%, with ₹52,000 crore of outstanding dues (apart from AGR obligations). These remaining spectrum obligations have now acquired a long repayment tenure, extending up to FY42.
Perpetual Bonds & Future Outlook
With the repayment of $1 billion perpetual notes, Airtel now has only $479 million worth of perpetual bonds outstanding. These were raised in FY21 and are due in FY26.
Airtel has been actively working towards lowering borrowing costs and prepays spectrum dues.
- September 2024: Airtel prepaid ₹8,465 crore to clear outstanding spectrum dues of 2016 auctions.
- December 2024: The company paid ₹3,626 crore to the DoT, settling its 2016 spectrum auction dues in entirety.
Airtel’s debt-reduction plan, which is on the aggressive side, should strengthen its financials and profitability in the next couple of years.
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Source: Moneycontrol.
